OUR  MONEY  WARS 

THE    EXAMPLE    AND    WARNING    OF 
AMERICAN  FINANCE 


BY 

SAMUEL  LEAVITT 

AUTHOR  OF   "  PEACEMAKER  GRANGE,"   ETC. 


BOSTON 
ARENA  PUBLISHING  COMPANY 

Copley  Square 
1694 


Copyright,  1894, 

by 

SAMUEL   LEAVITT. 

All  rights  reserved. 


Anna  Press 


~v8 


CONTENTS. 


CHAPTER   I. 
09 

«J  l6oO  TO  I70O. 

PAGE 

The  first  American  Money 1 

•The  first  Bank-notes 4 

The  British  Debt 4 

-    ^  First  American  Paper  Money 4 

CHAPTER    II. 

17OO  TO  I776. 

More  Paper  Money 6 

Truth  about  John  Low 6 

Speculations  in  France  in  1720 , 12 

Speculations  in  England  in  1720 13 

'  Paper  in  the  Colonies . . .» 1  t, 

The  Money  of  the  Poor.  .  .    19 

Continental  Money 19 

CHAPTER    III. 

I776  TO  I786. 

Continental  Money  (continued) 24 

Jefferson  to  Epps,  1S13 24 

The  first  Savings  Banks 26 

/^Shay's  Rebellion  in   1785 27 

The  Bank  of  North  America 28 

CHAPTER   IV. 

1786  to  1796.  f 

The  United  States  Begin 29 

The  first  United  States  Bank 31 

The  United  States  Mint ^ 

Money  of  Account 34 

The  Value  of  Foreign  Coins 35 

The  Foreign  Loans 36 


38S249 


iv  CONTENTS. 

CHAPTER   V. 

1796  to  1806. 

^^  PAGE 

The  Bank  of  Venice 37 

Foreign  Coins 38 

Small  Coins 38 

CHAPTER   VI. 

1806  TO  l8l6. 

Foreign  Coins 39 

•v    Wild-cat  Banks 39 

^  Fluctuations  of  Gold  in  England 39 

State  Banks 40 

V  Interest-bearing  Treasury  Notes 4  r 

The  Act  of  June  30,  1812 41 

The  Act  of  February  25,  1813 42 

•Jefferson  Disgusted 42 

Suspension  of  the  Banks 42 

The  Act  of  March  4,  1S14 43 

An  Original  Greenbacker 43 

Legal  Tender  to  Government 43 

How  Banks  are  Created 44 

A  Fight  against  Treasury  Notes 44 

An  Old  Story 47 

Madison  on  Treasury  Notes 47 

~aper  Money  Broke  the  Power  of  the  first  Napoleon 47 


\ 


>> 


K 


CHAPTER   VII. 

18 1 6  to  1826. 

C  urrency  Theories 49 

Foreign  Coins 49 

Testing  Treasury  Notes 50 

al-tender  Discussions 51 

The  Acts  of  May  15, 1820,  and  March  3,  1821 51 

Peel's  Resumption 51 

A  Parallel 56 

CHAPTER    VIII. 

1826  TO  1836. 

The  Steady  Currency  of  France 57 

Gen.  Jackson  takes  Hold 57 

Jackson's  Veto  Message,  July  10,  1832 59 

Jackson's  Message,  December  3,  1833 60 

The  Act  of  April   1 1,  1833 60 

,/^The  Act  of  June  25,  1834 60 

>The  Change  of  Ratio  between  Gold  and  Silver 60 

Banking  in  the  Northwest 64 

Speculation  in  England  in  1834,  '5  and  '6 65 


CONTENTS.  V 
CHAPTER  IX. 

1836  TO  1846. 

PAGE 

The  Banks  in  Luck  again 67 

Wisdom  of  Sarsaparilla  Townsend 67 

The  Act  of  January  18,  1837 68 

Panic  of  1S37 68 

^^Thomas  Benton  on  Currency 69 

-^^>One  Mill  Interest  per  Annum 72 

A  Thinker  cries  "  Eureka  !  " 73 

The  Act  of  May  21,  1838 73 

.^Albert  Gallatin 73 

Henry  C.  Carey's  "  Credit  System  " ' 74 

The  Philadelphia  Bank  of  the  United  States — Nick  Biddle's 75 

The  Act  of  July  4,  1S40 75 

President  Harrison  Died 76 

.  The  Act  of  August  13,  1841 77 

^^-> Relief  Notes 77 

j>Indiana  Treasury  Notes 78 

President  Tyler's   Financial  Instinct 78 

The  President  of  the  Bank  of  England 79 

The  United  States  Could  not  Borrow 80 

The  Act  of  June  30,  1842 80 

The  Act  of  August  31,  1842 81 

The  Act  of  March  3,  1843 8l 

^--^Sumner  of  Yale  Explains  Things      81 

The  Act  of  March  3,  1845 82 

CHAPTER  X. 

1846  TO  1856. 

The  Act  of  May  22,  1846 83 

The  Act  of  July  22,  1846 83 

The  Independent  Treasury  Act 83 

Money  for  the  Mexican  War 84 

^^•Speculations  and  Panic  of  1847 84 

France  Helped  the  Whole  World 85 

The  Act  of  March  3,  1849 86 

Wild  Cats  in  New  England 86 

S**  Gold  down,  Silver  up 86 

Bank  Notes  in  Australia 87 

Production  of  Gold  and  Silver — 1852  to  1876 88 

y>"The  first  Limited  Legal-tender  Act 88 

The  Clearing-house  Established 89 

CHAPTER  XL 

1856  TO  l86l. 

ryThe  Panic  of  1857 90 

The  Act  Demonetizing  Foreign  Coins   90 

"tephen  Colwell's  Description  of  the  Panic 91 


S* 


vj/  CONTENTS. 

I  PAGE 

Warwick  Martin  on  Panics 92 

Treasury  Notes  Again : 94 

The  Fall  of  Gold 94 

The  War  Panic 96 

The  Patient  Pack-mule — the  Treasury  Note 96 

CHAPTEE  XII. 

l86l  TO  1866. 

War 


The  Act  of  February  8,  1S61 — the  First  Treasury  Note  of  the  War. 

The  Act  of  March  2,  1861 

The  Yale  Hen  is  "  On  " 

Immense  Issues  of  Money 

Seven-thirties  and  Demand  Notes 

New  York  Banks  Suspend 

Legal-tenders  now  first  Repudiated  by  the  Government 

The  Act  of  February  1 2,  1862 

7-Thaddeus  Stevens'  Death  Cry 

The  Exceptions  on  the  Greenback 

The  Fatal  Act  of  February  25,  1862 

^Heath's  Great  National  Bear 

The  Origin  and  History  of  the  5-20  Bonds 

Loan  Certificates 

^^TJemand  Notes  Made  Full  Legal-tender 

^  The  Hazzard  Circular 

Postage  Made  Legal-tender 

Large  and  small  Greenbacks 

Who  Bought  the  5-2OS 

National  Banks  Authorized 

Interior  Banks  and  Redemption  Banks 

The  Ten-forties,  fractional  Currency,  etc 

The  Act  of  March  3,  1863 

Tricks  that  Were  Not  Vain 

The  Act  of  July  1 1,  1863,  Increasesthe  Ten  Days'  Loans 

Sarsaparilla  Townsend's  Wisdom  again 

Government  Selling  Gold 

National  Banks  Fixed  for  Gambling 

Gold  Futures  Stopped  and  Unstopped 

Chase  Frightened  Out 

The  Total  Currency  Issue — Eessfinden 

Six  Per  Cent.  Bonds 

Playing  Ink-fish 

Carey  on  McCulloch 

Seven-thirties 

State  Banks  Taxed  to  Death 

The  Freedmaq'g  Bank , 

McCulloch's  Treachery 

Retiring  Legal-tenders , 

The  total  Debt — Birkey 


00 

00 
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01 
01 
02 
02 

03 
04 

00 
06 

°7 
09 

00 
10 
10 
1 1 
11 
11 
12 
'3 
14 
'4 
16 

17 

17 
r9 
23 

24 
25 

-S 

-5 
27 
27 
28 
29 
29 
29 

31 

J1 


■sr 


CONTENTS.  vii 


Two  Billions  of  Currency 132 

McCulloch's  Mad  Policy 133 

Judge  Wm.  D.  Kelley  Pleads  Ignorance 134 

CHAPTER  XIII. 

lS66  TO  1873. 

Contraction. 

The  Contraction  Act  of  April    12,  1866 136 

The  Financial  Difficulties  of  England  in  1866 136 

Cash  Payments 138 

Three  Per  Cent.  Certificates 138 

"  Addition,  Division  and  Silence  " 138 

Vanderbilt  Waters  New  York  Central 139 

Sherman's  Entering  Wedge 139 

A  Short  Stop 140 

'  Check  to  Rothschild 140. 

A  "  Howling  Success  " 141 

The  Act  of  July  25,  1868 141 

Rothschilds  Win,  Seymour  Beaten •. . .  142 

There's  Millions  in  it 143 

Checking  the  Banks 144 

The  Credit   Strengthening  Act 144 

Black  Friday,  1869 146 

National  Banks  Allowed  to  Surrender  their  Circulation 147 

The  Great  Refunding  Act 148 

The  Supreme  Court  and  the  Legal-tenders 149 

Repeal  of  the  Income  Tax 1 50 

More  Wealth  in  Ten  Years  than  in  250  Previous 151 

The  Three- sixty-five  Bonds 151 

Carpet-bag   Debts 151 

French  Paper  Money 152 

The  Credit  Mobilier  and  Tweed  Rings 154 

Earnings  in  Production  and  in  Banking 154 

Preparing  for  the  Panic  of   1S73 154 

Apotheosis  of  Jay  Gould 155 

Germany  Kicks 157 

A  Warning  Silver  Prophet 1 57 

"ngland's  Five  Billions  of  Credit  Money 158 


CHAPTER  XIV. 
1873  TQ.  1880. 


Seven  Years  of  Famine  in  a  Land  of  Plenty. 

The  Demonetization  of  Silver 159 

"Ernest  Seyd 160 

fcThe  Great  Panic  of  1873 !^9 

The  Bank  Inflation 172 

The  Legal-tender  Contraction — Field 172 


viii  CONTENTS. 

PAGE 

""^  Pompous  David  A.  Wells 173 

The  Broken  Banks  and  Trust  Companies 175 

A  Wise  English  Opinion 176 

— JLittle  Chit  on  Banks 177 

"  Must  Trade  it  out  over  the  Counter  " 178 

Pulling  Down  the  American  Flag 178 

Victorious  Grant  Conquered 179 

'The  Public  Robbers  Let  Go 1S0 

National  Bank-note  Redemption 181 

The  Value  of  Convertible  Currency — Winder 182 

Bank  C  urrency  for  60  Years 184 

The  Three  Per  Cents 184 

Horrors  of  Resirrffption 185 

Who  Use  Savings  Banks 186 

->  Whatrthe  Hungry  Democrats  Did  in  1S74 187 

A  National  Debt  a  National  Blessing — Henry  Carey  Baird 188 

The  President  of  New  York  Metropolitan  Bank  Speaks  out 188 

>Drevv  versus  Wells 189 

Gold,  Flour  and  Beef 189 

Five  Million  Dollars  a  Day  Lost 190 

The  Resumption  Act  of  1S75  Scorched 190 

Dead  Wendell  Phillips  Speaketh 191 

Debtor  and  Creditor  Nations  —Winder , 194 

Solon  Chase  and  "Them Steers " 197 

Gold-Bug  Tricks 199 

Ben  Butler  and  Butler  Duncan 200 

Pandemonium  in  California 200 

Greenbackers  Organized  December  1,  1875 2or 

Frantic  Diabolism  of  New  York  Tribune 201 

Congress  and  Contraction , 201 

Gladstone  versus  Gold  Basis 203 

Trade  Dollars  Repudiated  in  1876 203 

Postal  Currency  Gone 203 

Grant  does  Unintended  Good 205 

Foolish  Californians 206 

Democrats  Repudiate  Resumption 206 

The  Bond  Age — $1 50,000,000,000 206 

Coin  and  Bullion  in  Europe 207 

"  Money  Market "  Easiest  in  the  Hardest  Times 207 

The  Silver  Commission  and  Hard  Times 208 

"  A  Mad,  Mad  World,  my  Masters  " 210 

The  Buell  Circular 212 

Stupid  Astonishment  of  the  Gold-Bugs    212 

What  "  Gentleman  George  "  Pendleton  said 213 

"  The  Leading  Papers  " 214 

No  more  Trade  Dollars  in  1S77 216 

Our  Per-Capita  Currency 216 

Debts  in  the  United  States 217 

The  English  See  our  Amazing  P'olly 218 

"  A  Year  of  National  Shame  " — 1878 219 

The  Partial  "  Uprising  of  a  Great  People  " *_ 219 

Bonds  not  Payable  in  Gold 220 


CONTEXTS. 


The  Bland  Bill  Passed  over  Hayes'  Veto 221 

The  Chicago  Inter-Ocean  Told  the  Truth  Then 222 

Ernest  Seyd  on  Silver  Demonetization 223 

Fourteen  Dollars  Per  Capita 224 

A  Million  and  a  Half  Greenback  Vote  and  20  Congressmen  in  1S78.  224 

The  Greenback  Remonetized  by  Sherman,  who  was  Scared 225 

Chicago  Tribune  on  the  Fraud  of  1873 226 

The  "  Leading  Paper  "  Caught  Napping 226 

Failures  in  Business 228 

"  One  Soweth — Another  Reapeth  " 229 

A  Resolute  Start 229 

A  Devouring  Demon  in  Philadelphia 230 

England  a  Thousand  Millions  Out 231 

California  Cleansed 232 

Gold  Big-Bug  Papers 232 

The  Interest  Equals  the  Public  Debt 233 

What  Gold  the  Banks  Had 234 

Bonds  Sold  after  January  1,  1876 234 

Gold  Rushes  from  Europe 235 

Paper  Money  in  the  United  States  for  21  Vears — Heath 236 

CHAPTER   XV 

18S0  TO   1885. 

The  Triumph  of  the  Plutocrats. 

Who  Held  the  Bonds 237 

Currency  of  Fifteen  Nations 238 

Greenbacks  and  National  Bank  Notes  Compared 239 

The  Bonded  I )ebts  of  all  Nations 239 

To  Pay  the  Bonds  at  Once 240 

Pretty  Good  Picking 240 

Compound  Interest 241 

Gould  Becomes  Respectable 241 

Another  Straw  (in  1890) 242 

The  Tonnage  of  the  Lake  Ports 242 

A  Bright  Idea — Whose  ? 243 

The  Ohio  Idea 244 

The  Carlisle   Refunding  Bill — 1SS1 245 

The  Bankers'  Rebellion 246 

Gould  Must  be  Sustained 247 

Senator  Jones  Saw  a  Great  Light 248 

Silver  Certificates  Preferred  to  Gold 249 

Keene  on  Gould 249 

The  St.  Louis  Republican 249 

An  Elastic  Currency 250 

Gold  Sticking  in  the  West 251 

Wm.  H.  Vanderbilt  Sells  his  Friends 251 

Eighty-six  National  Banks  Organized  in  1881 252 

Stocks  Go  up  Two  Billion  Dollars 252 

Severe  on  Secretary  Folger. 253 

Jesuitical  Nonsense . . ". 253 


CONTENTS. 


The  Gold  Drainage  from  Europe  to  America  . . .  v 254 

F.  13.  Thurber  and  his  Anti-Monopolists 254 

Interest  Coming  Down 254 

Knox  Knocked  Out 255 

Bank  Charter  Bill  Passed  —  1882 256 

Bank  Profits 259 

Trade  Dollars  in  Siam ' 259 

The  Water  and  Gas  Gone  out  of  Stocks —  1883 259 

The  "  Seney  Crowd's  "  High  Kicking 260 

Vanderbilt  Gets  Palaces  and  Respectability 264 

Thurber  on  the  Lard  Failures 265 

The  Trade  Dollar  Nuisance 266 

"  These  be  your  Gods,  O  Israel !  " 266 

A  Wall  Street  Panic— 18S4 267 

The  Greenback  Victory  in  the  Supreme  Court 267 

Many  Marvelous  Facts 267 

Keene  Bucks  against  "  The  Wizard  " 269 

Commodore  Garrison  Fails 270 

"  The  Blasted  Silver  Did  it " 271 

The  Bey  of  Tunis  Has  Coupon  Bonds 272 

Back  to  State  Banking 272 

False  Statement  about  France 272 

Banks  Retiring  Circulation 273 

The  Coming  Deluge  of  Silver 273 

Godkin's  Ghoulish  Glee 274 

Wm.  II.  Vanderbilt  still  Making  Hay 274 

The  Clearing-house  and  the  Treasury 274 

"  Union  of  the  Puritan  and  the  Black-leg  " 275 

Gould's  Greatness 276 

Not  Useful  Citizens 277 

CHAPTER  XVI. 

1885  TO  1893. 

The  Beginning  of  the  End. 

Belmont — Hewitt — Tildenism 279 

Secretary  Manning's  Panic — 1SS5 2S0 

"  Great  Heads  "  Rattled 2S1 

A  Curious  Proposition 282 

A  'Coon  Treed 283 

The  Ways  of  the  Robber  Nation 2S3 

Lord  Chancelors'  Gold  Pensions   284 

What  the  Soldiers  Lost 285 

A  Deluge  of  Trusts  and  Syndicates 285 

"  Who  Make  Lies  their  Refuge  " 286 

The  Old,  Old  Story— 1887 286 

Blaine  Right  this  Time 288 

I  Iigh  Treason ._. 290 

A  Poor  Creature 290 

In  a  Nutshell 291 

All  Products  Save  Gold  Fall  ^  per  cent,  between  1873  an<^  1887,. .  291 


CONTENTS.  xi 

PAGE 

Fair  Gambles ." 291 

Abundant  Silver  Helps  Producers — Jones 292 

Government  Loans  on  Land  and  Goods 294 

Ratio  of  Silver  and  Gold 295 

The  New  York  Sun  Inconsistent 295 , 

Trust  Company  Profits 296 

Silver  Bugaboos 298 

The  Silver  Bill  of  July  14,  1890 300 

Pensions  Furnish  Currency 302 

Senator  Jones  on  Intrinsic  Value 302 

Beecher's  Deacon  White ' 303 

Panic  of  November,  1S90 304 

Review  of  1891 306 

Do  you  Think,  O  Fools  ? 307 

After  the  St.  Louis  Convention 310 

Inductive  Method  with  Silver 313 

So  Stupid 314 

Gold  Imports,  1878-1892 316 

The  Panic  of  May,  1S93 317 

India  and  America 317 


OUR  MONEY  WARS. 


CHAPTER  I. 
1600  to  1700. 

The  First  American  Money. — Indian  money  or  wampum 
was  used,  in  New  England  almost  universally,  as  late  as 
1635.  For  a  long- time,  the  intercourse  between  the  Indians 
and  the  colonists  was  more  important,  in  an  economic 
sense,  than  has  commonly  been  supposed.  The  native 
was  a  producer,  not  only  for  himself,  but,  through  his  sur- 
plus, for  the  white  settler.  In  his  furs  he  furnished  the 
chief  staple  of  exchange  with  Europe.  But  he  did  more 
than  this,  he  supplied  corn  and  other  food  products  to  the 
colonists,  he  labored  for  the  planters  on  the  latters'  farms — 
unsteadily,  it  is  true,  but  such  help  as  he  was  willing  to 
give  was  indispensable.  It  is  also  to  be  noted  that  at  the 
first,  contact  with  the  colonists  benefited  the  Indian  from 
an  industrial  point  of  view.  A  Sachem  would  sell  a  tract 
of  land  for  a  certain  number  of  hoes,  and,  according  to 
Governor  Bradford,  these  iron  implements,  substituted  for 
the  wooden  spade,  or  clam  shell  of  the  squaws,  pro- 
duced more  corn  on  an  acre,  and  yielded  a  surplus  for 
sale.  Thus  the  Narragansetts  were  enabled  to  sell  from 
500  to  1,000  bushels  at  a  time. 

But  for  the  trade  which  soon  opened  up,  a  medium  of 
exchange  was  needed  ;  and  the  relative  importance  of  the 
parties  to  the  commercial  transactions,  is  indicated  by  the 
fact  that  it  was  the  money  not  of  the  colonists,  but  of 
the  Indians,  which  became  the  common  currency.  The 
aborigines  of  New  England  had  a  true  money  in  wampum. 


2  OUR  MONEY  WARS. 

This  name  was  given  to  the  white  beads  made  from 
the  stems  or  inner  whorls  of  a  sea-shell  found  on  all  the 
south  coast  of  New  England.  When  strung  they  were 
called  wampum-peage,  meaning  strings  of  white  beads. 
Color  was  the  basis  of  nomenclature,  as  well  as  of  differ- 
ence in  value.  The  black  beads,  which  were  called  Sacki 
and  were  made  from  the  dark  part  of  the  common  quahog, 
or  round  clam  shell,  were  generally  worth  twice  as  much 
as  the  white. 

What  at  first  especially  contributed  to  recommend  wam- 
pum as  a  currency  to  the  colonists,  was  the  fact  that  it 
was  exchangeable,  or,  so  to  speak,  redeemable  in  furs, 
and  above  all,  in  the  highly-prized  skins  of  the  beaver. 
Wampum  was  the  magnet  which  drew  the  beaver  out  of 
interior  forests,  and  sent  it  to  Europe,  thus  starting  the 
revolving  commerce  between  the  New  and  the  Old  World. 
In  calculating  wampum,  the  unit  of  measure  was  theo- 
retically a  string  of  beads  a  fathom  long,  but  in  practice 
the  length  varied.  After  1643  a  fathom  was  always 
worth  sixty  pence;  but  as  the  colonists  received  beads 
sometimes  at  four,  and  sometimes  six  a  penny,  the  num- 
ber of  beads  in  a  fathom  would  vary  from  240  to  360.  We 
refer,  of  course,  to  white  beads  ;  the  black  beads  were  rated 
by  colonial  statutes  at  twice  the  value.  The  strong  hold 
^upon  colonial  life  secured  by  wampum,  is  shown  by  a  long 
course  of  colonial  legislation  respecting  it.  In  1641  Mas- 
sachusetts made  the  shell  beads  a  legal  tender  at  six  a  penny 
up  to  ^10,  a  large  sum  in  the  transactions  of  that  date.  Two 
years  later  the  legal  tender  limit  was  reduced  to  40  shillings. 
At  that  time  wampum  was  a  universal  currency,  exchange- 
able for  merchandise,  for  labor  and  for  taxes.  In  1641, 
when  the  trade  in  wampum  was  farmed  out  in  Massachusetts, 
the  lessees  stipulated  to  redeem  from  Harvard  College  all  the 
accumulations  of  peage  or  string  beads,  in  its  treasury,  under 
£2$.  By  1645  the  inventories  of  deceased  colonists  com- 
monly contained  items  of  peage,  and  frequently  there  was 
no  other  money.  Judgments  of  the  courts  were  made  pay- 
able in  strings  of  beads.  It  is  interesting  to  learn  that  in 
1648  a  process  analogous  to  coinage  was  applied  to  wam- 
pum in  Massachusetts.  At  President  Dunster's  suggestion 
it  was  enacted  that  the  beads  should  be  strung  in  eight 
different   parcels;   id.,  3d.,  izd.,   in    white   beads;  2d.,  6d., 


OUR  MONEY  WARS.  3 

2S.  6d.,  and  10s.  in  b.lack.  Taken  together,  these  parcels 
formed  a  complete  assortment  of  change  or  small  coin. 

About  the  date  last  mentioned,  however,  the  circulation 
of  wampum  began  to  decline.  In  1649,  a  Massachusetts 
statute  prohibiting  the  receipt  of  beads  for  taxes — a  statute 
which  before  had  been  inoperative,  was  re-enacted  and  en- 
forced. There  were  several  causes  for  the  decline ;  for 
instance,  labor  had  become  better  organized,  and  coin  was 
more  abundant  among  the  colonists  ;  but  the  main  cause 
was  the  falling  off  in  the  supply  of  beavers.  The  colonists 
would  have  received  the  beads  as  readily  in  1660  as  1640, 
if  the  same  facility-of  redemption  in  beaver  had  existed  ;  for 
the  continued  use  of  wampum  as  an  accessory  currency 
shows  that  it  was  convenient  and  desirable.  In  the  remote 
districts  of  New  England,  wampum  still  circulated  in  the  be- 
ginning of  the  eighteenth  century.  Madam  Knight  found 
wampum  classed  as  currency  on  the  southern  shore  of  Con- 
necticut in  1704.  In  1693  the  shell  beads  were  recognized 
in  the  definite  rates  of  the  Brooklyn  ferry. 

In  1652  a  mint  was  set  up  in  Boston  to  coin  silver  into 
what  was  called  "  Pine  Tree  "  money.  Considerable  silver 
was  then  coming  from  the  West  India  trade — our  rulers  in 
England  only  busying  themselves  in  stealing  from  us  any 
good  money  we  could  get  hold  of.  Singularly  enough,  we 
depended  for  coin,  then,  largely  upon  another  class  of  pirates 
— the  Buccaneers  of  the  Spanish  Main — who  spent  most  of 
their  plunder  on  our  shores,  where  were  the  nearest  civilized 
ports.  This  was  a  great  blessing — "  a  blessed  providence  " 
— to  our  Puritan  ancestors,  and  the  gold-bug  economists  of 
that  time. 

Yet  barter  prevailed  generally,  on  account  of  the  scarcity 
of  money.  An  act  of  1654  provides  that  all  contracts  in 
kind  shall  be  so  satisfied. 

In  1655,  a  constable  brought  cattle  to  the  treasurer  for 
taxes,  which  were  so  poor  that  the  latter  would  not  receive 
them. 

In  1657,  another  constable  prayed  for  relief  because, 
having  taken  boards  for  taxes,  the  treasurer  would  not 
allow  him  as  much  as  he  allowed  for  them. 

In  1658,  it  was  ordered  that  no  man  should  pay  taxes  in 
"  lank  "  cattle. 

"  In  fact  the  barter  continued  general,"  says  Prof.  Wm.  G, 


4  OUR  MONEY  WARS. 

Sumner  of  Yale  College,  in  his  "  History  of  American 
Currency."  And  yet  this  same  learned  pundit,  who  is  one  of 
those  who  never  let  conditions  or  facts  bother  them  when  "  a 
theory  is  confronting  them,"  says,  in  the  first  page  of  his 
first  chapter  :  "  Every  community  will  have  so  much  of  the 
precious  metals  as  it  needs  for  its  exchanges."  This  sub- 
lime British  Bullion-Report  dogma  he  calmly  maintains 
throughout  his  book. 

The  First  Bank-notes. — It  will  not  seem  surprising  that 
money  was  scarce,  at  this  period,  when  we  consider  that  it 
was  about  1660  when  the  first  regular  bank-note  was  printed 
by  Palmstruck  of  Sweden.  He  met  the  usual  fate  of  great 
inventors,  and  reformers.  He  became  so  unpopular,  that  he 
got  into  difficulties  ;  and  was  finally  obliged  to  leave  his 
country.  But  soon  afterward,  the  Government  of  Sweden 
decided  that,  after  all,  the  bank-note  was  not  such  a  very 
bad  thing.  So  they  took  possession  of  the  bank  which 
Palmstruck  had  abandoned  ;  and  that  bank,  to-day,  is  the 
great  central  bank  of  Sweden. 

The  British  Debt. — Foreign  facts  that  have  a  special 
bearing  upon  American  finance  will  be  presented  here  in 
chronological  order.  For  instance,  we  are  informed  by 
Hume,  the  historian,  that  the  British  public  debt  had  reached 
only  the  small  sum  of  ,£1,054,925  on  March  20,  16S9.  But 
the  rulers  found  making  public  debts  "  a  great  scheme"; 
and  by  1697  the  French  war  had  raised  the  debt  to  .£50,- 
000,000.  The  French  war,  before  our  Revolution,  raised 
it  to  ^"140,000,000;  our  Revolution  to  ^"240,000,000,  and 
the  Napoleonic  war  to  ^"800,000,000,  in  1815,  where  it  has 
stuck  ever  since. 

First  American  Paper  Monev. — In  1690  the  first  issue 
of  paper  money  was  made  by  Massachusetts.  This  was  the 
year  before  the  establishment  of  the  Bank  of  England.  An 
expedition  had  been  sent  out  against  the  French  in  Canada  ; 
and  returning  without  the  hoped-for  plunder,  and  in  a  state 
of  misery,  the  soldiers  were  clamorous  for  their  pay.  So 
,£7,000  were  issued,  in  notes  from  5  shillings  to  £$.  The 
form  of  these  notes  or  bills  was  as  follows  :  "  This  in- 
dentured bill,  of  ten  shillings,  due  from  the  Massachusetts 
colony  to  the  possessor  shall  be  in  value  equal  to  money  ; 
and  shall  be  accordingly  accepted  by  the  treasurer  and 
receivers  subordinate  to  him,  in  all  public  payments,  for  any 


OUR  MONEY  WARS.  5 

stock  at  any  time  in  the  Treasury."     They  circulated  at  par 
with  coin  for  20  years  until _ redeem ecL_ 

The  "  Century  Magazine,"  in  1 891,  is  printing  a  lot  of  false 
statements  about  money  to  tickle  its  monopoly  readers.  Here 
is  what  the  "Twentieth  Century,"  said  about  one  of  its 
screeds. — In  "  Topics  of  the  Time  "  we  are  treated  to  a  re- 
view of  the  "  Century's "  own  tirades  against  "  cheap 
mo'ney."  The  land  bank  of  1696  failed.  The  land  bank  of 
Rhode  Island  failed.  John  Law's  bank  failed.  The  notes 
of  the  Argentine  republic  failed.  Argae,  all  cheap  money 
schemes  must  fail.  The  series  is  liable  to  several  criticisms. 
Imprimis,  it  does  not  embody  half  the  cheap  money  experi- 
ments which  have  been  made.  The  "  Century  "  is  aware  of 
this,  and  though  it  says  it  has  not  noticed  numerous  criti- 
cisms because  they  were  answered  in  subsequent  papers, 
threatens  a  fresh  series  to  fill  up  the  voids.  The  statement, 
quoted  this  month  from  the  Buenos  Ayres  "  Standard,"  that 
John  Law  lived  to  see  his  error,  is  false.  But,  passing  over 
these  minor  points — the  land  bank  of  1696  failed — that  is,  it 
never  came  into  working  existence,  not  as  the  "Century" 
man  says,  because  the  capitalists,  those  gods  of  the  bour- 
geois idolatry,  would  not  buy  the  stock  of  an  institution 
avowedly  intended  to  break  them  down,  but  because  the  rate 
at  which  it  could  lend  was  arbitrarily  fixed  at  3  y2  per  cent., 
while  the  current  rate  was  6  per  cent.,  an  arrangement  which 
could  only  have  been  intended  to  defeat  the  scheme  (Macau- 
lay  "  History  of  England,"  vol.  iv.,  pp.  553,  560,  Boston  edi- 
tion, 1856).  John  Law's  bank  did  not  fail  until  the  Missis- 
sippi scheme  was  added  to  it.  That  there  ever  was  a 
Mississippi  scheme  was  due  to  the  plethora  of  capital  seek- 
ing investment,  which  in  turn  was  due  to  Law's  success. 


OUR  MONEY  WARS. 


CHAPTER  II. 

1700  to  1776. 

More  Paper  Money. — In  1703,  South  Carolina  began  to 
issue  paper  money.  In  that  year,  also,  Massachusetts  made 
a  second  issue  of  ,£15,000  ;  which  was  made  &  legal  tender 
for  private  debts. 

In  1 7 16,  another  issue  to  the  amount  of  ;£i  50,000  was  au- 
thorized to  be  distributed  among  the  different  counties  of 
the  province ;  and  to  be  put  into  the  hands  of  five  trustees 
in  each  county,  to  be  appointed  by  the  Legislature  ;  to  be  let 
out  071  real  estate  security  in  the  county,  in  specific  sums,  for 
the  space  of  ten  years,  at  five  per  cent,  per  annum.  Another 
act  for  ,£50,000  in  bills  was  passed  in  1720,  which  resulted 
in  clearing  Massachusetts  of  debt  in  1773;  though  the  cur- 
rency was  usually  much  below  par  in  coin. 

In  1709,  Connecticut  began  to  issue  bills.  We  must  here 
diverge  to  get  some  facts  from  Europe. 

The  Truth  about  John  Law. — In  answer  to  questions,  I 
printed  in  the  Chicago  Express,  in  August,  1891,  the  following  : 
"  The  History  of  John  Law.  Law,  a  Scotchman,  Was  King 
of  French  Finance  for  Many  Years.  Made  Mistakes,  but 
Was  '  a  Financier  Without  a  Parallel.'  " 

We  are  asked  about  John  Law,  the  noted  financier,  and 
reply:  He  was  born  in  Scotland  in  1671.  His  father  was 
a  goldsmith  and  banker.  The  son  was  a  brilliant  scholar 
with  a  great  head  for  finance.  After  some  years  spent  in 
travel  he  returned  home.  A  book  printed  in  Scotland  in 
1 7 01  called,  "  Proposals  and  Reasons  for  Constituting  a 
Council  of  Trade  in  Scotland,"  was  reprinted  in  his  name  in 
1 75 1  ;  but  that  book,  though  right  in  his  line  of  work,  was 
evidently  written  by  Win.  Paterson,  founder  of  the  Bank  of 
England.  It  suggested  a  central  board  to  manage  great 
commercial  undertakings  like  the  East  India  Company,  that 
flourished  so  long  in  India,  and  to  furnish  occupation  for  the 
poor,  to  encourage  mining,  fishing  and  manufactures,  and  to 


OUR  MONEY  WARS.  -j 

bring  about  a  reduction  in  the  rate  of  interest.  It  is  plain 
that  from  this  book  Law  got  the  first  hint  of  the  ideas  that 
he  afterward  carried  out  in  Mississippi  and  France. 

In  17 15,  Law  went  to  France,  when  the  Duke  of  Orleans, 
with  whom  he  was  a  favorite,  became  Regent.  The  late 
monarch  had  run  up  the  public  debt  to  three  milliard  (three 
thousand  million)  livres,  and  national  bankruptcy  was  talked 
of.  A  squeeze  of  creditors  reduced  the  debt  one-half. 
Then,  in  the  old  style  of  inflation,  practiced  by  kings,  the 
coin  was  called  in  and  re-issued  at  the  rate  of  120  for  100. 
This  was  a  great  boon  to  foreign  coiners.  The  notes  issued 
on  this  basis  at  once  sank  75  per  cent,  below  their  nominal 
value. 

It  was  when  French  affairs  were  in  this  wretched  state 
•that  Law  proposed  one  of  his  vast  schemes  to  the  Regent. 
The  latter  let  him  try  a  part  of  it.  By  an  edict  of  May  2, 
17 16,  a  private  bank  called  the  General  Bank  was  founded, 
with  Law  for  manager.  The  capital  was  six  million  livres, 
divided  into  1200  shares  of  5,000  livres  each,  payable  in  four 
installments,  one-fourth  in  cash,  three-fourths  in  the  "  billets 
d'etat,"  the  national  notes,  that  were  at  such  discount.  It 
was  to  perform  the  usual  work  of  a  bank,  and  could  issue 
notes  payable  at  sight ;  in  the  weight  and  value  of  the 
money  mentioned  at  the  day  of  issue. 

The  bank  was  a  great  and  immediate  success.  By  provid- 
ing for  the  absorption  of  part  of  the  state  paper  it  raised  to 
some  extent  the  credit  of  the  Government.  The  notes  were  a 
most  desirable  medium  of  exchange,  for  they  had  the  ele- 
ment of  fixity  of  value,  which  was,  owing  to  the  arbitrary 
mint  decrees  of  the  Government,  wanting  in  the  coin  of  the 
realm.  They  were  also  found  the  most  convenient  instru- 
ments of  remittance  between  the  capital  and  the  provinces, 
and  they  thus  developed  and  increased  the  industries  of  the 
latter.  The  rate  of  interest,  previously  enormous  and  uncer- 
tain, fell  first  to  6  and  then  to  4  per  cent.  ;  and  when  another 
decree  (April  10,  17 17)  ordered  collectors  of  taxes  to  receive 
notes  as  payment  (like  our  Demand  Notes)  and  to  change 
them  for  coin  at  request,  the  bank  so  rose  in  favor  that  it  had 
soon  an  issue  of  60  million  livres.  Law  now  gained  the  full 
confidence  of  the  Regent,  and  was  allowed  to  proceed  with 
the  development  of  the  "  system." 

Remember  in  reading  what  follows  that  this  was  near  200 


8  OUR  MONEY  WARS. 

years  ago,  when  experiments  in  finance  were  more  fantastic, 
numerous  and  dangerous  than  those  with  the  steam  engine. 

The  trade  of  the  French  possessions  in  Louisiana,  etc.,  all 
called  Mississippi,  had  been  granted  to  a  speculator  named 
Crozat.  He  found  the  undertaking  too  large  and  was  glad 
to  give  it  up.  Law  was  allowed  to  establish  the  "  West 
Indies  Company,"  and  endow  it  with  privileges  amounting 
to  sovereignty.  The  capital  was  ioo  million  livres,  divided 
into  200,000  shares  of  500  livres.  The  payments  were  to  be 
one-fourth  in  coin,  and  three-fourths  in  National  notes.  On 
these  last  the  Government  was  to  pay  3  million  livres  inter- 
est yearly  to  the  company.  As  the  state  paper  was  depre- 
ciated the  shares  fell  much  below  par.  The  rapid  rise  of 
Law  had  made  him  many  enemies,  and  they  took  advantage 
of  this  to  attack  the  system.  D'Argenson,  the  former  chief 
of  police,  and  head  of  the  Council  of  Finance,  with  the 
brothers  Paris  of  Grenoble,  famous  tax  farmers  of  the  day, 
formed  what  was  called  the  "  Anti-System."  The  farming  of 
the  taxes  was  let  to  them,  under  an  assumed  name,  for  48  1-2 
million  livres  a  year. 

That  was  a  worse  state  of  things  than  we  have  here  now. 
If  Law  had  been  as  wise  as  Solon,  but  without  Solon's  dicta- 
tor power,  he  could  not  have  straightened  French  finance. 

The  Anti-Law  party  formed  a  company  the  exact  counter- 
part of  the  Mississippi  Company.  The  payments  were  to  be 
entirely  in  money.  The  returns  from  the  public  revenue 
obtained  by  these  tax  farmers  were  sure  ;  those  from  the 
Mississippi  scheme  were  not.  Hence  the  shares  of  the  lat- 
ter were  for  some  time  out  of  favor.  Law  proceeded  un- 
moved with  the  development  of  his  plans.  December  4, 
1718,  the  bank  became  a  Government  institution  called  The 
Royal  Bank.  Law  was  manager  and  the  king  guaranteed 
the  notes.  The  shareholders  were  repaid  in  coin,  and  to 
widen  the  influence  of  the  new  institution,  the  transport  of 
money  between  towns  where  it  had  branches  was  forbidden. 

It  thus  appears  that  Law  was  the  founder  of  the  Bank  of 
France,  which  has  kept  up  in  various  forms  until  now.  He 
is  generally  depicted  by  bullionists  as  an  addlepated  infla- 
tionist, bringing  ruin  and  destruction  by  all  his  schemes.  He 
certainly  made  many  mistakes  and  saw  many  things  wrong. 
But  here  is  what  the  sober  old  Cyclopedia  Britannica  says 
about  him ;   "  Notwithstanding  the  faults  of  his  system,  it 


OUR  MONEY  WARS.  9 

cannot  be  denied  that  its  author  was  a  financial  genius  of 
the  first  order.  He  had  the  errors  of  his  time ;  but  his 
writings  show  that  he  first  propounded  many  truths  as  to  the 
nature  of  currency  and  banking  then  unknown  to  his  con- 
temporaries. The  marvelous  skill  which  he  displayed  in 
adapting  the  theory  of  the  system  to  the  actual  condition  of 
things  in  France,  and  in  carrying  out  the  various  financial 
transactions  rendered  necessary  by  its  development  is  ab- 
solutely without  parallel" 

Before  continuing  his  story  we  will  give  briefly  what  his 
system  was  as  described  in  his  "  Money  and  Trade  Consid- 
ered." He  thoroughly  appreciated  the  need  of  an  abundance 
of  money,  though  he  bungled  about  getting  it.  He  was  too 
much  like  our  bankers  in  fondness  for  credit  money.  He 
Said  that  "  credit  if  it  have  a  circulation  has  all  the  beneficial 
effects  of  money.  To  create  and  increase  instruments  of 
credit  is  the  function  of  a  bank."  If  he  had  strictly  fol- 
lowed his  next  rule  he  would  have  done  better  :  "  Let  such 
be  created  then,  and  let  its  notes  be  only  given  in  return  for 
land  sold  as  pledged^'  He  was,  as  will  be  shown,  swept 
away  by  a  tide  of  speculators  and  politicians,  and  could  not 
do  this. 

He  dimly  saw  the  need  of  a  Government  currency,  and 
partly  succeeded  in  getting  it.  But  he  could  do  nothing 
moderately.  Like  the  Bellamyites  of  to  day,  seeing  the  evil 
of  private  monopolies  and  the  farming  of  the  taxes,  he  pro- 
posed to  unite  foreign  trade  and  internal  finance  in  one  huge 
monopoly  managed  by  the  state  for  the  people. 

Now  for  the  rest  of  his  story,  ending  in  a  grand  smash. 

We  left  him  in  17 18  with  the  king  guaranteeing  his  bank- 
notes. The  paper  issue  now  reached  no  millions.  Then 
he  agreed  to  take  Mississippi  shares  at  par  at  a  near  date. 
The  shares  rose.  The  next  move  was  to  merge  the  "  Oriental 
India  "  and  the  "China"  companies,  founded  respectively 
in  1664  and  1713,  with  his  new  one  into  "The  Company 
of  the  Indies."  The  fact  that  those  companies  had  been 
running  so  long  though  feebly,  shows  that  this  "  South  Sea 
Bubble  "  was  not  formed  of  such  ephemeral  material  as  gen- 
erally supposed.  But  the  French  have  no  genius  for  ruling 
colonies.  They  have  not  the  iron  grip  of  John  Bull,  that 
made  a  success  of  the  East  India  Company  financially,  by 
grinding  the  Hindoos  to  death. 


IO  OUR  MONEY  WARS. 

For  the  amalgamated  company  25  million  livres  capital 
was  issued.  The  payment  was  spread  over  twenty  months. 
It  required  four  of  the  old  shares  and  a  premium  of  50  livres 
to  obtain  a  new  one.  All  these  500  livre  shares  rose  rapidly 
to  750. 

Law  now  tried  to  get  new  powers.  July  25,  1719,  an 
edict  gave  the  company  control  of  the  mint  for  9  years  for 
5  million  livres.  For  this,  new  500  livre  shares  were  issued 
with  a  premium  of  500.  Five  of  the  old  shares  went  for  one 
of  these;  12  per  cent,  per  annum  dividends  were  prom- 
ised on  these. 

Again  Law's  enemies  tried  to  ruin  him  by  a  run  for  coin. 
But  now,  having  kingly  power,  he  ordered  a  reduction  in  the 
value  of  coins  at  a  given  date.  This  brought  the  coin  back 
on  the  run.  August  27,  1719,  brought  an  edict  giving  his 
company  the  farming  of  the  revenues  for  9  years  for  52  mill- 
ion livres.  His  enemies  lost  it.  This  floored  them.  Law 
now  tackled  the  national  debt  of  1500  million  livres.  He  is- 
sued notes  to  that  amount.  The  creditors  were  paid  in  a 
certain  order.  The  company  issued  shares  to  correspond, 
and  as  these  were  the  chief  investment  available  the  creditors 
bought  them  with  the  notes  as  fast  as  they  were  paid.  Gov- 
ernment paid  3  per  cent,  on  the  loan  shares.  It  had  before 
to  pay  80  millions  on  the  debt  per  annum.  It  was  now  50 
millions.  The  shares  were  so  eagerly  taken  that  often  others 
got  them  when  Government  creditors  could  not.  October  2 
the  shares  sold  at  8,000  livres  on  the  Bourse. 

Law  had  now  more  than  regal  power.  The  exiled  Stuarts 
paid  court  to  him.  The  proudest  European  aristocracy 
humbled  themselves  before  him.  Our  Nick  Biddle,  100 
years  later,  "  was  not  a  patch  to  him."  He  was  made  con- 
troller general  of  the  finances  ;  and  the  Bank  was  united  in 
name  as  well  as  in  reality  with  the  Company. 

Dec.  1 7 19,  was  high-water.  The  500  livres  shares  had 
reached  20,000  livres.  But  then  decay  began.  The  same 
madness  of  speculation  that  prevailed  in  England  at  that 
time  seized  France.     Men  rushed  to  Paris  to  speculate. 

Then  some  began  to  think.  The  market  value  of  the 
shares  was  12  milliards.  500  million  revenue  was  needed  for 
an  annual  5  per  cent,  on  this.  The  company  could  only  pay  5 
per  cent,  on  1  milliard,  677  million  the  original  capital.  The 
commercial    undertakings  had    only  begun    to   pay.     Much 


OUR  MONEY  WARS.  II 

time  would  be  needed  for  an  East  India  Co.  success  ;  the 
French  were  "  not  in  it "  when  colony  squeezing  was  called 
for. 

People  began  to  sell  the  shares  and  buy  coin,  houses,  land, 
anything  stable.  Law  knew  what  was  needed — general  scal- 
ing down,  as  had  been  done  with  the  debt.  But  he  dare  not 
do  it.  He  issued  violent  edicts.  The  notes  must  be  at  a 
premium  over  coin.  Big  premiums  were  promised.  It  was 
useless.  Coin  fled  the  country.  Prices  rose.  Distress  pre- 
vailed. Law  lost  his  influence.  His  enemy  stampeded  him, 
and  demolished  his  system.  A  vast  number  of  the  shares 
i  found  in  the  bank  were  destroyed.  The  notes  were  recon- 
\  verted  into  Government  debt.  The  li  system "  had  disap- 
\  peared  with  French  haste  by  November,  1720.* 

Law  left  France  in  Dec,  1720,  poor  as  he  'came.  He  had 
never  grasped  at  private  wealth.  Montesquieu  pathetically 
describes  him  as  he  found  him  in  Venice,  still  planning  com- 
mercial prosperity  for  France.  He  died  there  March  21, 
1729. 

It  will  be  seen  from  the  above  that  Law  was  the  founder 
of  the  Bank  of  France.  But  observe  in  the  following  the 
timidity  of  an  authority  usually  so  good  as  Appleton's  Cyclo- 
pedia, in  making  no  mention  of  the  fallen  hero.     It  says  : 

"  In  17 16  a  bank  was  founded  in  Paris  under  this  name- 
which  was,  two  years  later,  changed  to  the  Royal  Bank, 
Under  this  organization,  it  remained  until  1803  ;  when,  hav- 
ing been  unsuccessful,  it  was  placed  upon  its  present  organ- 
ization as  the  Bank  of  France,  with  a  capital  of  45,000,000 
francs,  which  was,  in  1806,  increased  to  90,000,000  francs.  At 
present  the  capital  is  182,500,000  francs,  and  the  charter  of 
the  bank  extends  to  Dec.  31,  1897.  It  is  a  bank  of  deposit, 
discount,  and  circulation  ;  issuing  its  own  notes,  and  having 
an  exclusive  monopoly  of  this  privilege  for  the  whole  country. 
It  is,  in  one  sense,  a  Government  institution,  the  Govern- 
ment appointing  a  governor  and  two  deputy  governors — all 
of  whom  must  be  stockholders  in  the  bank. 

';  The  affairs  of  the  institution  are  managed  by  a  council- 

*  Sometimes  a  few  lines  of  inside  history  are  worth  whole  books  of  that 
usually  printed.  There  is  nothing  more  certain  than  that  a  chief  reason 
why  Law  could  not  save  his  system  was  found  in  the  fact  that  the 
king's  mistresses  had  invested  heavily  in  the  "  shares,"  and  absolutely 
stopped  him  from  scaling  them  down  as  he  knew  should  be  done. 


12  OUR  MONEY  WARS. 

general  of  20  members,  who  are  elected  by  200  of  the 
principal  stockholders.  No  bills  are  discounted  having  more 
than  three  months  to  run  ;  and,  as  a  general  thing,  they 
must  be  guaranteed  by  three  approved  signatures,  though  in 
some  instances  two  are  accepted.  The  Governor  makes  an 
annual  report.  The  annual  dividends  are  limited  to  five  per 
cent ;  all  profits  over  that  amount  being  invested  in  five  per 
cent,  consolidated  stock  ;  to  be  divided  among  the  stock- 
holders at  the  expiration  of  the  charter.  In  1848,  all  the 
banks  in  other  great  cities  were  consolidated  with  it ;  and  it 
now  has  62  branches." 

The  three  following  items  show  that  our  Judge  Warwick 
Martin,  from  whom  they  were  taken,  did  not  know  that  he 
was  speaking  of  the  work  of  his  great  fellow-worker  John  Law. 

The  Bank  of  France. — In  1720,  the  notes  of  the  Royal 
Bank  of  France  were  at  a  premium  over  coin  of  50  per  cent. 
At  the  time  the  bank  was  established  the  notes  were  made 
payable  in  coin  of  the  standard  fineness  of  the  French  Gov- 
ernment of  that  period.  But  the  Government  added  50  per 
cent,  to  the  alloy,  in  their  coins,  in  the  good  old  style  of 
inflation,  and  reduced  the  fineness  to  that  e'xtent ;  while 
the  notes  of  the  bank  continued  to  be  paid  in  the  fine  coin 
called  for  in  the  notes.  Until  the  edict  of  the  Government 
compelled  the  bank — a  private  corporation— to  pay  in  current 
coin,  the  notes  were  worth  50  per  cent,  over  the  coin  of  the 
nation. 

Speculations  in  France  in  1720. — The  suspension  of  the 
Royal  Bank  of  France  in  1720  was  caused  by  speculations 
of  the  most  gigantic  character,  both  in  the  Eastern  and 
Western  hemispheres.  Money  was  furnished  by  this  bank 
to  purchase  the  Companies  of  the  East  and  of  the  West,  the 
Senegal  Company  and  the  Company  of  the  Indies.  The 
parties  purchasing  these  companies  engaged  in  all  kinds  of 
speculation,  with  the  intention  of  controlling  the  business  of 
the  world.  When  the  bank  made  loans  and  advances  to 
these  speculators,  it  was  not  only  in  profession  but  in  reality 
a  specie-paying  bank.  The  bank  was  compelled  to  suspend 
specie  payments  ;  but  let  it  not  be  forgotten  that  all  the 
money  to  engage  in  and  sustain  these  speculations  was  ad- 
vanced by  the  bank  before  suspension,  not  after.  When  the 
bank  suspended  the  speculators  and  the  speculations  failed. 
The  suspended  bank  did  not  aid  them. 


OUR  MONEY  WARS.  13 

Speculations  in  England  in  1720,  or  About  that  Time. 
— These  speculations  equaled  those  of  France.  More  than 
two  hundred  speculative  companies  were  gotten  up  and  put 
into  operation  in  England  alone.  Large  premiums  were 
paid  for  the  privilege  of  subscribing  to  the  stock  of  many  of 
these  companies,  so  great  was  the  speculative  prospects  of 
large  fortunes  therefrom.  The  people  were  deranged  by  the 
immediate  prospects  of  immense  gains.  But  let  it  be  remem- 
bered that  the  money  by  which  these  grand  schemes  were 
carried  on  was  not  suspended  bank-notes  or  irredeemable 
paper  money  of  a  nation,  or  irredeemable  paper  of  any  kind. 
The  notes  and  credits  of  the  Bank  of  England,  which  bank 
then  professed  to  pay  coin  for  all  liabilities,  did  the  work. 
The  bank  was  ultimately  compelled  to  suspend  ;  but  the 
money  to  conduct  these  speculations  was  furnished  while  the 
bank  professed  to  pay  coin. 

Paper  in  the  Colonies. — In   1720,  bills  were   issued  by 
the  colony  of  Rhode  Island,  and   were  made  legal  tender  for 
all  debts.      » 
"~  In  1723,  Pennsylvania  began  to  issue  money. 

In  this  year,  a  great  crisis  occurred  in  England.  The  bank 
was  suspended.  The  coin  of  the  American  colonies  was 
required,  and  drawn  over,  in  England's  peremptory  fashion 
— to  prepare  the  bank  for  resumption.  All  coin  left  Penn- 
sylvania ;  though  the  State  passed  laws  raising  its  value. 
Then  the  State  issued  treasury  notes,  and  kept  them  in  use 
until  1773,  when  Parliament  finally  made  all  such  issues  void 
(after  prohibiting  them  in  1 75 1).  The  money  was  made  legal 
tender.  It  was  redeemed  by  the  payment  of  taxes,  without 
loss  to  any  one.  This  is  the  familiar  history  of  Pennsyl- 
vania, and  the  statement  of  Franklin. 

Benjamin  Franklin,  on  p.  185  of  his  autobiography,  said  : 
"  I  remember  well  that  when  I  first  walked  about  the  streets 
of  Philadelphia,  eating  my  roll,  I  saw  most  of  the  houses  of 
Walnut  Street,  between  Second  and  Front  Streets,  with  bills 
on  their  doors  To  Let,  and  many  likewise  on  Chestnut  Street ; 
which  made  me  think  that  the  inhabitants  of  the  city  were 
deserting  it  one  after  another.  Our  junta  debates  possessed 
me  so  fully  of  the  subject  that  I  wrote  and  printed  an  anony- 
mous pamphlet  on  '  The  Nature  and  Necessity  of  a  Paper 
Currency.'  It  was  well  received  by  the  common  people  in 
general ;  but  the  rich  men  disliked  it,  for  it  increased  as  well 


i4  OUR  MONEY  WARS. 

as  strengthened  the  clamor  for  more  money  ;  and  they  hap- 
pened to  have  no  writer  among  them  that  was  able  to  answer 
it.  Their  opposition  slackened,  and  the  point  was  carried 
by  a  majority  in  the  House.  The  utility  of  this  currency 
became,  by  experience,  so  evident  as  never  to  be  much  dis- 
puted ;  so  that  it  grew  soon  to  be  ,£55,000,  and  in  1779  to 
,£80,000,  since  which  it  rose  to  £"350,000 — trade,  buildings, 
and  inhabitants  all  the  while  increasing."  Again  he  said,  in 
1764,  when  in  England,  that  the  paper  money  of  New  York, 
New  Jersey,  and  Pennsylvania  was  "  a  chief  cause  of  their 
great  increase  in  settlements,  numbers,  buildings,  improve- 
ments, agriculture,  shipping,  and  commerce." 
1  Maryland  began  to  issue  money  in  1733. 

Delaware  began  in  1739. 

Virginia  began  in  1755 — though  England  prohibited  such 
issues  in  1751. 

Dr.  Franklin  visited  England,  and  protested  against  the 
act,  that  was  caused  by  the  English  jealousy  of  the  prosperity 
and  growing  independence  of  the  colonies.  Franklin  stated 
to  the  British  authorities,  that  before  the  issue  of  colonial 
money,  the  colonies  were  stripped  of  gold  and  silver.  That 
there  were  great  difficulties  for  want  of  money,  as  trade  had 
to  be  carried  on  by  the  extremely  inconvenient  method  of 
barter.  But  that  the  introduction  of  colonial  money  had 
given  new  life  to  business,  and  promoted  greatly  the  settle- 
ment and  development  of  the  country.  Whereby  the  prov- 
inces had  greatly  increased  in  inhabitants,  and  their  exports 
had  been  increased  tenfold.  This  Parliamentary  prohibition, 
more  than  anything  else,  led  to  the  discontent  which  resulted 
in  the  Revolution. 

The  people  of  Massachusetts  made  a  desperate  effort  to 
get  currency  by  establishing  a  Land  Bank  about  1740. 
Sumner  of  Yale  shows  what  a  Tory  he  would  have  been,  had 
he  lived  then,  by  this  talk  about  it :  "  The  Governor  made 
war  on  this  bank,  with  all  his  energy,  as  unlawful  and  per- 
nicious, contrary  to  the  act  of  Parliament  and  to  his  instruc- 
tions. Finding  that  some  civil  and  military  officers  were  en- 
gaged in  it,  he  removed  them.  This  called  forth  a  protest 
from  Samuel  Adams  and  John  Choate,  as  an  invasion  of 
personal  liberty.  There  can  be  no  doubt  that  the  bitterness 
engendered  by  this  conflict  was  one  great  cause  of  the  Revo- 
lution.    Two  great  economic  errors  were  amongst  the  causes 


OUR  MONEY  WARS. 


JS 


of  that  war.  One,  the  attempt  of  the  colonies  to  issue 
paper,  in  which  they  were  in  error  as  to  the  question  of 
political  expediency ;  the  other,  the  attempt  by  England  to 
carry  out  the  '  colonial  system,'  "  etc.,  etc. 

So  we  see  Sumner  versus  the  Revolutionary  Fathers.  He 
makes  the  same  objection  to  Continental  money,  though  he 
gives  no  shadow  of  a  method  by  which  they  could  have 
fought  the  war  without  paper  money.  It  would  be  in  the 
style  of  this  extraordinary  person  to  say  :  "  They  should 
not  have  rebelled  if  they  could  not  do  it  without  paper 
money." 

Governor  Shirley,  of  Massachusetts,  now  took  it  in  his  head 
to  capture  Louisburg,  on  Cape  Breton ;  which,  by  help  of  other 
colonies,  and  a  succession  of  strange  and  lucky  accidents,  was 
'  accomplished,  June  28,  1745.  There  was  much  plunder  and 
glory.  Yet  the  chief  good  was  the  excuse  for  a  quantity  of 
paper  money.  But  to  the  delight  of  Sage  Sumner  of  Yale, 
Parliament  was  so  tickled  by  this  bit  of  honest  industry,  that 
it  resolved  to  ransom  Louisburg  from  the  colonies  with  hard 
silver  and  copper.  Here  was  a  case  where  Sumner's  justly 
celebrated  "  laws  of  nature  "  provided  Massachusetts  with 
"  just  the  coin  it  needed."  But  the  Boston  Puritan  Fathers 
got  so  large  a  share  of  the  buccaneering  plunder,  that  the 
other  colonies  were  out  in  the  cold.  Massachusetts  called 
in  its  "  paper  promises  to  pay,"  and  went  proudly  on  to  a 
"  sound  honest  money  basis."  Miss  Bay  State  turned  up  her 
nose  at  the  other  colonies — obscured  them  in  passing,  with  her 
gorgeous  silvery  parasol ;  and  never  spoke  as  she  passed 
them  by,  as  they  lay  floundering  "  in  the  soup."  Sumner — ■ 
usually  so  sour  over  all  financial  affairs  but  those  of  England 
— is,  for  once,  radiantly  happy  over  this  conservative  policy. 
Being  a  thorough  Calvinist,  he  believes  that  the  ruin  it 
wrought  on  the  other  colonies  "  served  them  right."  He 
thus  briefly  disposes  of  them  : 

"  The  only  '  shock  '  was  to  Rhode  Island  and  New  Hamp- 
shire, who  found  their  trade  transferred  to  the  '  silver  col- 
ony,' and  their  paper  heavily  and  suddenly  depreciated." 

j  "  But  things  like  that,  you  know,  must  be 
In  every  glorious  victory  !  " 

The  West  India  trade  of  Massachusetts  had  been  largely 
done  through  Newport.  It  was  now  transferred  to  Salem 
and  Boston.     "  None  but  the  brave  deserve  the  fair  !  "  Selah  ! 


1 6  OUR  MONEY  WARS. 

Much  general  sudden  bankruptcy  ensued,  on  account  of 
this  glorious  providential  "  resumption  :  "  but  Sumner — 
with  that  tender  mercy  of  a  Torquemada  for  which  he  is 
noted — coolly  remarks,  in  opposition  to  those  who  recom- 
mended a  slower  process :  "  A  bankruptcy  could  not  be 
too  sharply  and  definitely  accomplished  when  resolved 
upon." 

In  1764,  before  the  Stamp  Act  was  proposed  in  Parlia- 
ment (which  was  passed  the  next  year,  and  repealed  the  year 
following),  Dr.  Franklin,  writing  in  England  in  defense  of 
the  paper  money  of  the  colonies,  says  :  "  On  the  whole, 
no  method  has,  hitherto,  been  framed  to  establish  a  medium 
of  trade  in  lieu  of  money,  equal,  in  all  its  advantages,  to  bills 
of  credit,  founded  on  sufficient  taxes  for  discharging  thou, 
or  land  securities  of  double  the  value  for  repaying  them  at 
the  end  of  the  term,  and  in  the  mean  time  made  a  general 
legal  tender.  The  experience  of  now  nearly  half  a  century 
in  the  middle  colonies  (New  York,  New  Jersey,,  and  Penn- 
sylvania) has  convinced  them  of  it  among  themselves,  by 
the  great  increase  of  their  settlements,  numbers,  buildings, 
improvements,  agriculture,  shipping,  and  commerce.  And  the 
same  experience  has  satisfied  the  British  merchants  who 
trade  thither,  that  it  has  been  greatly  useful  to  them,  and 
not  in  a  single  instance  prejudicial." 

In  1764,  the  British  Board  of  Trade  objected  to  the  use  of 
legal-tender  paper  money  in  the  colonies  (doubtless  because 
it  rendered  the  people  of  the  colonies  independent  of  the 
money  power  of  Great  Britain),  on  the  ground  that  "  every 
medium  of  exchange  should  have  an  intrinsic  value ; 
which  paper  money  had  not."  Dr.  Franklin  replied  : 
"  However  fit  a  particular  thing  may  be  for  a  particular  pur- 
pose, whenever  that  thing  is  not  to  be  had,  or  not  to  be  had 
in  sufficient  quantity,  it  becomes  necessary  to  use  something 
else, — the  fittest  that  can  be  got, — in  lieu  of  it.  *  *  *  Bank 
bills  and  bankers'  notes  are  daily  used  here  [England]  as  a 
medium  of  trade ;  and,  in  large  dealings,  perhaps,  the 
greater  part  is  transacted  by  their  means.  And  yet  they 
have  no  intrinsic  value ;  but  rest  on  the  credit  of  those  that 
issued  them,— as  paper  bills  in  the  colonies  do  on  the  re- 
spective settlements  there.  These  (bank  bills)  being  pay- 
able in  cash,  upon  sight,  by  the  drawer  is,  indeed,  a  circum- 
stance that  cannot  attend  the  colony  bills  ;  for  the  reason 


OUR  MONEY  WARS.  17 

just  above  mentioned, — their  cash  (bullion)  being  drawn 
from  them  by  the  British  trade.  But  the  legal  tender  being 
substituted  in  its  place,  is  rather  a  greater  advantage  to  the 
possessor ;  since  he  need  not  be  at  the  trouble  of  going  to  a 
particular  bank  or  banker,  to  demand  the  money. 

"  At  this  time,  even  the  silver  money  in  England  is  obliged 
to  the  legal  tender  for  a  part  of  its  value  •,  that  part  which  is 
the  difference  between  its  real  weight  and  its  denomination. 
Great  part  of  the  shillings  and  sixpences  now  current  are,  by 
wearing,  become  five,  ten,  twenty,  and  some  of  the  sixpences, 
even  fifty  per  cent,  too  light.  For  this  difference  between 
the  real  and  the  nominal,  you  have  no  intrinsic  value.  You 
have  not  so  much  as  paper  :  you  have  nothing.  It  is  the 
legal  tender, — with  the  knowledge  that  it  can  easily  be  re- 
passed for  the  same  value, — that  makes  three  pennyworth 
of  silver  pass  for  sixpence."  Franklin 's  Works:  Duane's 
edition,  vol.  iv.,  1809. 

Another  extract  from  Franklin's  works  gives  this  version 
of  the  colonial  money  : — 

"The  Assembly  of  Pennsylvania,  by  an  act  passed  in  1739, 
authorized  the  issue  of  paper  money  to  the  amount  of  eighty 
thousand  pounds  sterling  ($400,000).  This  was  to  be  emitted 
to  the  several  borrowers  from  a  loan  office,  established  for 
that  purpose.  Five  persons  were  nominated  trustees  of  the 
loan  office,  under  whose  care  and  direction  the  bills  or  notes 
were  to  be  emitted. 

"  They  were  to  lend  out  the  bills  on  real  security  of  at  least 
double  the  value  for  a  term  of  sixteen  years,  to  be  paid  with 
interest.  One-sixteenth  part  of  the  principal  was  yearly  paid 
back  into  the  office,  which  made  the  payment  easier  to  the 
borrower.  The  interest  was  applied  to  public  services  ;  the 
principal  during  the  first  ten  years  let  out  again  to  fresh 
borrowers. 

"  The  borrowers,  from  year  to  year,  were  to  have  the  money 
only  for  the  remaining  part  of  the  term  of  sixteen  years,  re- 
paying by  fewer,  and  of  course,  proportionately  large  install- 
ments, and  during  the  last  six  years  of  the  sixteen  the  sums 
paid  in  were  not  emitted,  but  the  notes  burnt  and  destroyed, 
so  that  at  the  end  of  sixteen  years  the  whole  might  be  called 
in  and  burnt,  and  the  accounts  completely  settled. 

"  Lest  a  few  wealthy  persons  should  engross  all  the  money, 
which  was  intended  for  more  general  benefit,  no  one  person, 
2 


1 8  OUR  MONEY  WARS. 

whatever  security  he  might  offer,  could  borrow  more  than 
one  hundred  pounds. 

"  Thus  numbers  of  poor  settlers  were  accommodated  and 
assisted  with  money  to  carry  on  their  settlements,  to  be  re- 
paid in  easy  yearly  payments,  as  the  yearly  products  of  their 
lands  should  enable  them." 

It  bore  no  promise  of  redemption  in  coin,  but  a  pledge 
that  it  should  be  received  for  all  dues.  It  rested  wholly  upon 
the  credit  of  the  commonwealth,  the  taxpayers  and  producers, 
and  it  was  loaned  to  the  extent  of  the  demand,  upon  "  land 
and  plate." 

It  passed  through  no  banker's  hands,  but  was  loaned  to 
the  people  direct,  thus  saving  banking  toll,  and  banking  re- 
striction of  volume  ;  nor  are  there  any  panics  or  fluctuations 
recorded. 

Thomas  Powell,  M.P.,  of  England,  who  had  acted  as 
governor  and  commander-in-chief  of  all  provinces,  in  a  book 
written  by  him  in  1768,  says  in  regard  to  this  colonial  system 
of  money  : 

"  I  will  venture  to  say  that  there  never  was  a  wiser  or 
better  measure,  never  one  better  calculated  to  serve  the  uses 
of  an  increasing  country,  and  never  was  a  measure  more 
steadily  pursued  or  more  faithfully  executed  for  forty  years 
together  than  the  loan  office  in  Pennsylvania,  formed  and 
administered  by  the  assembly  of  that  province. 

"  In  a  country  under  such  circumstances  money  lent  upon 
interest  to  settlers  creates  money.  Paper  money  thus  lent 
upon  interest  will  create  gold  and  silver  principal,  while  the 
interest  becomes  a  revenue  that  pays  the  charges  of  the 
government.  This  currency  is  the  true  Pactolean  stream 
which  converts  all  into  gold  that  is  washed  by  it." 

As  a  result  of  this  system,  Dr.  Franklin  says  :  ^Between 
the  years  1740  and  1775,  while  abundance  reigned  in  Penn- 
sylvania and  there  was  peace  in  all  her  borders,  amore  happy 
and  prosperous  population  could  not  perhaps  be  found  on 
this  globe.  In  every  home  there  was  comfort.  The  people 
generally  were  highly  moral,  and  knowledge  was  extensively 
diffused." 

Franklin,  in  vol.  4,  p.  85,  of  his  works,  says  :  "  Gold  and 
silver  are  not  intrinsically  of  equal  value  with  iron.  Their 
value  rests  chiefly  on  the  estimation  they  happen  to  be  in 
among  the  generality  of  nations.     Any  other  well-founded 


OUR  MONEY  WARS.  19 

credit  is  as  much  an  equivalent  as  gold  and  silver.  Paper 
money,  well-founded,  has  great  advantages  over  gold  and 
silver;  being  light  and  convenient  for  handling  large  sums, 
and  not  likely  to  hare  its  volume  reduced  by  demands  for 
exportation.'''' 

David  Hume,  the  historian,  says  in  substance  :  "  In 
Pennsylvania  the  land  itself  is  coined.  A  planter,  immediately 
he  purchases  land,  can  go  to  a  public  office,  and  receive 
notes  to  the  amount  of  half  his  land,  which  notes  he  employs 
in  all  payments  :  and  they  circulate  through  the  colony  by 
convention.  No  more  than  a  certain  sum  is  issued  to  one 
planter  ;  and  each  must  pay  back  into  the  public  treasury, 
every  year,  one  tenth  of  his  notes.  When  they  are  all  paid 
back,  he  can  repeat  the  operation."  This  brought  a  pros- 
perity that  Burke  said  was  "  unparalleled." 

In  an  evil  hour,  the  British  Government  took  away  from 
America  its  "  representative  money  ;  "  commanded  that  "  no 
more  paper  bills  of  credit  should  be  issued  ;  and  that  they 
should  cease  to  be  a  legal  tender  ;  "  and  collected  the  taxes 
in  hard  silver.  This  was  in  1773.  The  contracting  of  the 
circulating  medium  paralyzed  all  the  industrial  energies  of 
the  people.  Ruin  seized  upon  these  once  flourishing  colonies  ; 
the  most  severe  distress  was  brought  home  to  every  interest 
and  every  family ;  discontent  was  urged  on  to  desperation ;  till, 
at  last,  " human  nature,"  as  Dr.  Johnson  phrases  it,  "arose 
and  asserted  its  rights." 
.  The  Moneyof  thePoor. — In  1775  the  Parliament  of  Great 
Britain  passed  an  act  providing  that  "  all  promissory  or  other 
notes,  bills  of  exchange  or  drafts  or  undertakings  in  writing, 
being  negotiable  or  transferable,  for  the  payment  of  any  sum 
or  sums  of  money  less  than  the  sum  of  20  shillings  in  the 
whole  *  *  shall  be  and  the  same  are  hereby  declared  to  be 
absolutely  void  and  of  no  effect."  Two  years  after,  this  was 
followed  by  an  act  extending  these  provisions  to  all  sums 
under  five  pounds.  To  us,  at  the  present  time,  this  appears 
to  be  an  act  of  flagrant  tyranny,  upon  the  part  of  the  strong 
against  the  weak.  Why  may  not  a  poor  man  give  his  note 
for  19  shillings  or  for  four  pounds,  as  well  as  the  rich  for 
larger  sums. 

Continental  Money. — The  act  of  June  25,  1775,  was 
passed  more  than  one  year  before  independence  was  declared. 
It  authorized  the  issue  of  $2,000,000  of  notes,  which  re.ad  aa 


2o  OUR  MONEY  WARS. 

follows  :  "  This  note  entitles  the  bearer  to  receive Spanish 

mill  dollars,  or  the  value  thereof  in  gold  or  silver,  according 
to  the  resolution  of  Congress  of  the  ioth  of  May,  1775." 

We  need  not  say  that  this  was  neither  money  nor  a  promise 
to  pay  money  emanating  from  any  individual  State  or  nation. 
The  note  authorized  the  party  holding  it  to  receive  therefor 
Spanish  mill  dollars,  or  their  equivalent  in  gold  or  silver  ; 
but  it  did  not  obligate  any  person,  State  or  nation,  to  pay 
said  dollars,  or  other  coin. 

We  point  out  the  defects  in  this  money,  and  show  the 
causes  of  its  depreciation  in  the  following  manner : — - 

1.  The  States  were  contending  with  the  greatest  nation  on 
earth.  Her  armies  had  generally  been  victorious  on  land. 
She  was  conceded  to  be  the  mistress  of  the^eas.  The  States 
were  poorly  prepared  for  war  with  such  a  power.  They  had 
no  army,  no  navy,  no  fortifications,  no  arms,  no  ammunition, 
no  credit,  no  money.  The  odds  were  immensely  against 
them,  viewed  from  a  military  standpoint.  The  contest  was 
not  only  doubtful,  but  from  any  standpoint,  excepting  justice 
and  right,  was  overwhelmingly  in  favor  of  Great  Britain. 
Under  these  circumstances  it  would  have  been  difficult  to 
maintain  a  State  paper  circulation  at  par,  had  Congress 
adopted  the  best  method  of  doing  it.  But  with  the  means 
adopted,  it  is  astonishing  that  any  success  attended  their 
efforts  to  keep  the  Government  circulation  at  par. 

2.  At  the  time  $6,000,000  of  this  money  were  issued  inde- 
pendence had  not  been  declared.  The  States  were  still 
colonies,  and  the  people  and  Congress  subjects  of  Great 
Britain,  styling  themselves  in  their  communications  to  the 
throne,  "  Your  Majesty's  most  faithful  subjects."  They  were 
engaged  in  petitioning  for  and  demanding  their  rights  as 
"  British  subjects."  They  were  also  preparing  to  defend 
their  rights  and  maintain  them  if  denied  to  them  by  the 
mother  country.  To  raise  and  equip  an  army  for  that  pur- 
pose was  at  first  their  only  object  in  issuing  these  bills  of 
credit.  At  that  time  the  United  States  were  not  a  nation. 
The  power  delegated  to  Congress  by  the  States  extended  only 
to  soliciting  and  demanding  a  restoration  of  rights,  and  to 
prepare  for  war,  if  need  be.  Congress  were  little  else  than 
an  advisory  counsel  to  the  States.  They  possessed  no 
power  to  impose  and  collect  taxes  or  duties,  and  did  not  at- 
tempt it     They  enacted  that  the  States  should  impose  taxes 


OUR  MONEY  WARS.  2> 

and  collect  them ;  but  the  States  could  comply  with  the 
wishes  of  Congress  in  this  behalf,  or  neglect  to  do  so,  and 
some  of  them  did  the  latter. 

3.  The  bills  of  credit  emitted  by  Congress  were  not  made 
legal  tender  in  payment  of  private  debts,  and  were  not  made 
receivable  for  debts  due  Congress  or  the  colonies.  Congress 
had  no  debts  due  them.  They  collected  no  duties  on  imports 
or  internal  revenue.  These  impositions  and  collections  were 
confined  to  the  States.  To  Congress  it  was  all  outgo  and 
no  income.  They  made  their  own  money,  and  paid  it  out  to 
equip  and  sustain  the  army  and  to  support  a  limited  civil 
service.  There  was  but  one  means  through  which  the  money 
issued  and  paid  out  by  the  Continental  treasurer  could  get 
back  into  his  hands.     Of  this  we  shall  speak  hereafter. 

.4.  Previous  to  1779  the  faith  of  the  States,  as  expressed 
by  Congress,  was  pledged  for  the  redemption  of  the  bills 
emitted  ;  but  the  faith  of  Congress,  or  of  a  national  Govern- 
ment of  any  kind,  was  not  pledged.  The  law  did  not,  at  any 
time,  read  that  Congress  would  pay,  or  that  the  treasurer 
would  pay,  but  that  the  States  as  individuals,  not  collectively, 
would  pay.  Everybody  knew  that  the  duty  of  paying  or  re- 
deeming the  bills  devolved  upon  the  States  in  their  individual 
capacity,  not  upon  Congress  or  a  nation.  Each  State  was 
bound  only  for  its  portion.  The  debt  was  divided  among 
the  States  according  to  population.  This  fact,  at  the  be- 
ginning of  1779,  or  thereabout,  was  extensively  circulated 
among  the  people,  to  the  prejudice  of  Congress,  and  to  the 
depreciation  of  the  bills.  Congress  noticed  the  charge,  and 
pledged  the  faith  of  the  United  States  for  the  redemption  of 
the  bills,  and  soon  after  commenced  giving  certificates  of  in- 
debtedness bearing  interest  for  them. 

5.  But  another  most  fatal  mistake  in  the  issue  of  this 
money  was  in  making  it  payable  not  only  in  coin,  but  in  that 
which  was  at  a  premium  over  other  coin.  It  should  not  have 
been  redeemable  in  coin  of  any  kind ;  it  should  have  been 
made  legal  tender — lawful  money.  The  States  had  only 
about  $5,000,000  of  coin  all  told.  It  was  impossible  to  make 
the  redemption  in  coin,  and  no  such  promise  should  have 
been  given.  If  no  coin  had  been  promised  in  the  law  or  in 
the  notes,  no  one  would  have  expected  coin,  and  it  would 
not  have  been  demanded.  But  the  law  expressly  promised 
coin.     When  the  people  presented  the  notes  at  the  treasury 


22  OUR  MONEY  WARS. 

of  a  State,  or  that  of  Congress,  and  demanded  the  fulfill- 
ment of  the  promise,  and  learned  that  the  coin  could  not  be 
paid,  the  credit  of  the  notes  was  injured  ;  though  the  people 
stood  the  disappointment,  and  continued  to  receive  and  pay 
the  money  until  another  injurious  circumstance  occurred. 

6.  Very  unwisely,  the  Continental  money  was  not  made  as 
though  intended  to  circulate  as  money.  For  the  purpose  of 
giving  it  credit  above  other  notes,  it  was  made  payable  in 
coin,  which  was  at  a  premium.  The  failure  to  pay  coin  for 
it,  as  promised,  reduced  it  somewhat  in  value  ;  and  the  failure 
of  the  States  to  redeem  it,  as  provided  by  law,  reduced  it  still 
lower.  The  extension  of  time  in  which  the  States  were  to 
redeem  the  notes,  from  four  years  after  1779  to  nineteen 
years  after  that  time,  had  a  still  greater  depressing  effect. 

7.  The  fact  that  the  printing  of  the  notes  was,  of  necessity, 
poorly  done,  caused  them  to  be  counterfeited  in  large  quanti- 
ties ;  so  that  few  persons  could  know  the  good  notes  from 
the  counterfeits.  The  people  feared  to  receive  them.  This 
counterfeiting  was  a  trick  of  the  enemy  to  destroy  the  money. 

8.  At  the  time  these  notes  began  to  depreciate  it  was  the 
darkest  in  the  Revolution.  Our  armies  had  not  been  suc- 
cessful in  battle.  The  British  had  been  reinforced.  The 
contest,  with  men  of  weak  faith,  was  doubtful.  The  people 
did  not  need  to  be  told  that  if  the  cause  failed  the  money 
would  be  worthless.  The  cause  of  the  colonies  depended' 
upon  sustaining  the  money  of  the  colonies.  Great  Britain 
knew  this  ;  and  for  the  purpose  of  destroying  the  Revolution, 
the  armies  of  the  Crown,  with  the  aid  of  British  gold  and 
silver,  and  their  allies,  the  Tories,  used  all  their  powers  to 
cut  off  from  the  colonies  the  sinews  of  war,  and  thus  to  de- 
stroy the  American  cause.  Much  of  the  depreciation  of  the 
bills  of  credit  was  owing  to  these  efforts. 

9.  Had  this  money  been  both  issued  and  redeemable  by  the 
nation  or  Government ;  had  the  Government  possessed  the 
power  to  impose  duties  on  imports  and  internal  taxes,  and  to 
collect  them  ;  had  the  bills  been  made,  by  the  act  creating  them, 
legal  tender  in  payment  of  all  private  debts  and  receivable  for 
debts  due  the  nation  and  individuals,  with  power  in  the  general 
Government  to  make  its  authority  respected  ;  had  nothing 
been  said  in  the  law  or  in  the  notes  about  paying  in  specie,  as 
was  done  on  the  issue  of  our  Treasury  notes  ;  and  no  provision 
been  made  for  the  States  to  redeem  them  in  coin,  which 


OUR  MONEY  WARS.  23 

they  failed  to  do,  not  more  than  $50,000,000  need  to  have 
been  issued.  The  money  paid  out  would  have  returned  to 
the  Treasury  for  taxes  and  duties,  and  could  have  been  repaid 
out.  This  would  have  obviated  the  necessity  of  issuing 
three-fourths  of  the  bills  issued,  and  kept  those  out  at  par, 
or  nearly  so,  with  coin.  But  whether  par  with  coin  or  not, 
they  would  have  been  a  sure,  sound,  and  safe  circulation, 
with  which  the  loyal,  people  would  have  been  satisfied.  Had 
these  bills  from  the  beginning  been  convertible  into  three, 
four,  or  five  per  cent,  interest-bearing  certificates  or  bonds, 
at  the  will  of  the  holder,  and  reconvertible  into  bills,  when 
desired,  this,  with  their  reception  for  all  debts  due  the  nation 
and  people,  would  have  insured  their  good  standing  among 
the  people,  and  made  them  a  first-class  currency. 


24  OUR  MONEY  WARS. 


CHAPTER  III. 
1776  to  1786. 

Continental  Money  (continued). — That  great  finan- 
cier, Albert  Gallatin,  said  :  "  The  Continental  money  carried 
the  United  States  through  the  most  arduous  and  perilous 
stages  of  the  war,  and  *  *  *  it  cannot  be  denied  that  it  saved 
the  country." 

Jefferson  to  Epps,  1813. — "In  the  Revolutionary 
War,  the  old  Congress  and  the  United  States  issued 
bills  without  interest  and  without  tax.  They  occupied  the 
channels  of  circulation  very  freely ;  until  those  chan- 
nels were  overflowed  by  an  excess  beyond  the  calls  of 
circulation.  But  although  we  have  so  improvidently  suf- 
fered the  field  of  circulating  medium  to  be  filched  from  us  by 
private  individuals  ;  yet  I  think  we  may  recover  it,  in  part, 
and  even  in  the  whole,  if  the  States  will  co-operate  with 
us  *  *  *  It  is  not  easy  to  estimate  the  obstacles  which,  in 
the  beginning,  we  should  encounter,  in  ousting  the  banks 
from  the  possession  of  circulation." 

Again  Jefferson  said  :  "  Continental  money  expired  without 
a  single  groan.  Not  a  murmur  was  heard  among  the  people. 
On  the  contrary,  universal  congratulations  took  place  on 
their  seeing  the  gigantic  mass, — whose  dissolution  had  threat- 
ened convulsions  which  should  shake  their  infant  confederacy 
to  its  centre, — quietly  interred  in  its  grave.  Foreigners,  in- 
deed, who  do  not  like  the  natives,  feel  indulgence  for  its 
memory, — as  of  a  being  which  has  vindicated  their  liberties, 
and  fallen  in  the  moment  of  victory, — have  been  loud,  and 
still  are  loud,  in  their  complaints.  A  few  of  them  have 
reason  ;  but  the  most  noisy  are  not  the  best  of  them.  They 
are  persons  who  have  become  bankrupt  by  unskillful  attempts 
at  commerce  with  America.  That  they  may  have  some  pre- 
text to  offer  to  their  creditors,  tney  have  bought  up  great 
masses  of  this  dead  money  of  America, — where  it  is  to  be 
had  at  $5,000  for  one  ;  and  they  show  the  certificates  of  their 


OUR  MONEY  WARS.  25 

paper  possessions  as  if  they  had  died  in  their  hands ;  and 
had  been  the  cause  of  their  bankruptcy." 

Calhoun  said  :  "  Continental  money  is  the  ghost  conjured 
up  by  ail  who  wish  to  give  the  banks  an  exclusive  monopoly 
of  Government  credit." 

Birkey  said  in  his  "  Money  Question  "  :  "  It  is  worthy  of  note 
that  Continental  bills  were  not  issued  in  the  form  of  paper 
money  ;  such  as  was  first  introduced  in  Massachusetts,  and 
subsequently  adopted  by  many  of  the  other  colonies  ;  but  in 
the  form  of  promises  to  pay  specie,  at  certain  specified  times, 
which,  under  the  circumstances,  was  a  manifest  impossibility. 
The  gradual  depreciation  of  Continental  money,  as  it  passed 
from  hand  to  hand,  inflicted  a  loss  upon  each  successive  holder ; 
which  came  to  be  regarded  in  the  nature  of  a  tax,  or  contribu- 
tion  toward  the  cause  of  independence.  The  large  sums  held 
by  individuals,  after  it  ceased  to  circulate,  were  taken  at  its 
greatest  depreciation ;  and  no  great  loss  was  sustained. 
When,  after  it  had  seen  the  liberties  of  the  people  vindicated 
it  sank,  in  the  moment  of  victory,  quietly  into  its  grave,  no 
commercial  crash  or  money  panic  attended  its  fall." 

Some  wise  man  said,  in  1878  :  "The  Continental  money 
was  lost  but  once — by  depreciation.  The  funded  Greenbacks 
and  other  currency  are  lost  once  in  every  eleven  years,  in 
payment  of  interest  on  the  bonds." 

Judge  Warwick  Martin   says  : — 

"  Before  we  can  fully  understand  and  appreciate  what  the 
States  did  surrender  to  the  Federal  Government,  we  must 
know  what  powers  they  possessed  previous  to  the  adoption 
of  the  Constitution,  and  what  they  did  relating  to  money. 
All  the  powers  which  they  had  relating  to  war,  peace,  duties 
on  imports,  coining  money  of  gold  and  silver,  or  copper,  or 
emitting  bills  of  credit,  and  making  them  legal  tender,  they 
yielded  up  to  Congress.  Now,  what  did  they  possess  and 
use  ?  The  history  of  the  States  and  the  journal  of  the 
Continental  Congress  show  plainly  that  these  States  coined 
money  of  gold,  silver,  and  copper,  and  regulated  its  value. 
They  also  regulated  by  law  the  value  of  foreign  coins. 
They  emitted  their  own  Treasury  notes  or  bills  of  credit,  and 
made  them  legal  tender  in  payment  of  all  debts  clue  the 
States  and  individuals  therein.  In  entering  the  General 
Government  as  States,  they  renounced  all  these  rights  and 
privileges,  and  transferred  "them  to  the  Federal  Government, 


-2 6  OUR  MONEY  WARS. 

which  was  created  by  and  for  the  benefit  of  all  the  States. 
It  is,  therefore,  preposterous  to  suppose  that  the  Federal 
Government  possesses  less  power  relating  to  money  than  was 
possessed  by  the  States  in  their  independent  capacity.  Yet 
the  theory  that  the  United  States  are  prohibited  from  doing 
what  each  one  of  the  States  could  do,  and  did,  involves  this 
absurdity. 

"  For  the  benefit  of  those  who  may  not  believe  that  the 
States  did  issue  legal  tender  paper  money  before  and  during 
the  Revolution,  we  state  that  the  Continental  Congress,  be- 
fore and  after  the  adoption  of  the  Articles  of  Confederation, 
did  not  issue,  or  pretend  to  issue,  money  of  any  kind.  They 
did  issue  what  they  called  bills  of  credit :  but  they  possessed 
no  power  to  make  these  bills  legal  tender,  or  to  issue  coin  of 
any  kind.  They  saw  the  necessity  of  having  their  bills  made 
legal  tender,  to  prevent  their  depreciation  ;  but  they  did  not 
possess  the  power  to  make  them  such.  In  1778,  when  the 
notes  began  to  depreciate,  Congress  called  upon  the  States 
to  make  them  legal  tender,  as  they  had  done  their  own  bills." 

This  was  neglected.  And,  also,  Franklin's  proposition  to 
fund  them. 

Finally,  as  to  Continental  money,  even  "  that  inexpressible 
specter,"  Prof.  Sumner  of  Yale,  has  to  admit  that  "  on  account 
of  the  peculiar  character  of  American  society,  there  are  few 
family  traditions  of  the  Continental  currency." 

That  is,  none  but  the  traitors  of  the  period  howled  about  it. 

Again,  as  to  this  question  of  the  authority  given  by  Con- 
gress, Martin  says :  "  No  less  than  seven  materials  have 
been  used  by  Congress,  in  making  money  for  the  people  ; 
only  two  of  which  (gold  and  silver)  are  named  in  the  Consti- 
tution. The  other  five  are  :  copper,  tin,  zinc,  nickel,  and 
paper,  not  one  of  which  is  named  in  the  Constitution.  But 
we  are  told  that  the  Constitution  authorizes  Congress  to  coin 
but  not  to  print  money.  The  one  is  understood  to  apply 
to  metal,  and  the  other  to  paper.  But  at  this  time,  in  all 
Europe,  coin  and  print  mean  the  same  thing.  The  two  words 
are  used  by  all  financial  writers  as  interchangeable.  They 
both  mean  stamp,  and  nothing  else." 

Looking  abroad  in  1778,  we  find  the  first  savings  bank 
founded  in  that  year. 

The  First  Savings  Banks. — A  committee  of  the  French 
Government  has  traced  the  history  of  these  institutions  in 


OUR  MONEY  WARS.  2y 

various  countries  ;  showing  that  the  first,  on  record,  was 
formed  at  Hamburg,  in  1778,  as  a  branch  of  a  friendly  soci- 
ety; that  the  example  was  followed  in  several  German  and 
Swiss  towns;  and  that,  in  1798,  Mrs.  Wakefield  established 
a  Poor  Children's  Savings  Bank  at  Tottenham,  England ; 
which  in  1804  expanded  into  a  regular  savings  bank,  leading 
to  the  creation  of  about  60  others  before  18 17,  when  an  act 
was  passed  to  regulate  them.  In  France,  a  Bureau  d' Econo- 
mic was  founded  in  1787.  Feuchere  afterward  established  a 
Chambre  d 'Accumulation  de  Capitaux  ct  d' Interets.  An  Act 
of  1793  promised  the  foundation  of  a  Caisse  Nationalc  de 
Prcvoyance ;  and  the  Bank  of  France,  in  the  year  1808,  was 
required  to  open  a  department  for  the  receipt  of  deposits 
above  50  francs ;  but  the  first  real  savings  bank  was  only 
formed  in  18 18.  The  deposits  in  all  Europe,  exclusive  of 
Russia  and  Turkey,  recently  amounted  to  5,900,000,000 
francs.  They  have,  during  the  last  few  years,  increased 
largely  in  England  and  Switzerland,  owing  to  the  multiplica- 
tion of  banks;  and  also  in  Austria,  owing  to  the  precautions 
adopted  against  a  run  on  them  during  a  financial  crisis. 
*  *  *  During  the  last  years  of  the  French  Empire  a 
modification  of  the  rules  was  repeatedly  demanded,  and  two 
committees  investigated  the  subject;  that  of  1869  recom- 
mending that  a  bank  should  be  open  on  Sundays  at  every 
mairie,  and  that  the  maximum  should  be  raised  to  3,000 
francs. 

Shay's  Rebellion  in  1785. — Thousands  of  people  have 
heard  of  this,  without  knowing  what  it  was  about.  It  was 
such  a  rebellion  as  we  ought  to  have  had  between  1866  and 
1874.  It  occurred  in  New  England;  and  was  an  insurrec- 
tion of  debtors,  who  were  suffering  from  an  attempt  to  return 
to  specie  payment.  The  people  cried  out  for  paper  money. 
It  was  put  down  by  force  of  arms,  but  accomplished  its  im- 
mediate purpose,  as  Massachusetts  passed  a  law  delaying 
the  collection  of  debts.  In  Rhode  Island  the  movement  was 
not  riotous,  but  took  the  form  of  a  political  issue.  The  paper 
money  men  carried  the  election  in  1786,  and  more  paper  was 
issued. 

Some  one  should  write  a  full,  truthful  account  of  this 
affair,  as  the  bullionists  have  published  lying,  garbled  ac- 
counts of  it — -as  a  sort  of  John  Law  inflation.  [The  "  Century," 
for  May,  1891,  has  such  a  story.] 


2 8  OUR  MONEY  WARS. 

The  Bank  of  North  America. — In  1781  came  the  Bank 
of  North  America.  This  bank  was  chartered  by  the  Conti- 
nental Congress  in  this  last  year  of  the  war  for  independence, 
and  gave  very  solid  help.  Robert  Morris,  of  Philadelphia, 
where  the  bank  was  placed,  suggested  it.  Its  capital,  at 
first,  was  $400,000.  It  was  afterward  increased  to  $2,000,- 
000.  Congress  took  a  portion  of  the  stock.  The  notes  of 
the  bank  were  made  legal  tender  for  all  debts  due  the  Gov- 
ernment. This  made  them  the  notes  of  the  Government. 
Owing  to  this,  the  demands  upon  the  bank  for  coin  were 
small  and  infrequent.  No  difficulty  was  experienced  from 
such  demands.  The  people  preferred  these  notes  to  coin. 
At  that  time  the  coin  in  the  country  was  estimated  at  $5,000,- 
000.  The  notes  of  this  bank,  thus  connected  with  the  Gov- 
ernment, brought  the  coin  from  its  hiding-places.  The  esti- 
mated amount  was  soon  $10,000,000.  The  people  deposited 
the  coin  in  the  bank,  and  used  the  notes  in  place  thereof  in 
business.  The  coin  greatly  increased  in  amount,  instead  of 
diminishing.  It  was  not  needed  except  for  change.  It  went 
into  the  Continental  Treasury.  The  notes  went  into  the 
hands  of  the  people,  and  were  retained.  By  these  means, 
the  coin  known  to  exist  was  almost  doubled.  The  Govern- 
ment was  prepared  for  emergencies.  The  money  continued 
in  use  after  the  war  closed;  and  it  was  as  useful  in  peace  as 
in  war.  It  was  not  costly,  like  loans.  That  bank  still  exists 
in  Philadelphia. 


OUR  MONEY  WARS  29 


CHAPTER  IV. 
1786  to  1796. 

The  United  States  Begin. — March  4,  1789,  the  United 
States  Government,  with  its  Constitution,  as  presented  to 
Congress  Sept.  19,  17 88,  went  into  operation. 

Never  until  1862  was  the  power  of  the  Government  to 
make  its  paper  money,  or  that  of  the  banks,  legal  tender 
for  all  payments  to  the  United  States  denied.  The  power  to 
make  such  money  legal  tender  in  payment  of  private  debts 
was  never  fully  adopted  until  1862  ;  when  it  was  denied  to  the 
Government.  The  notes  of  the  banks  of  the  United  States 
of  1791  and  1816,  the  notes  of  State  banks  from  1S12  to 
18 14,  the  Treasury  notes  of  the  United  States  from  1812  to 
1817,  and  the  same  from  1S37  to  1861,  had  all  been  made 
legal  tender  for  all  debts  clue  the  Government,  including 
duties  on  imports  ;  but  they  were  not  treated  as  legal  tender 
to  the  people.  In  1862,  the  powers  of  bankers  over  Congress, 
and  especially  in  the  Senate,  was  so  great  that  this  order  was 
changed  in  relation  to  Treasury  notes.  They  were  made 
unlimited  legal  tender  to  the  people,  but  of  limited  legal 
tender  to  the  Government.  This  was  done  to  insure  their 
being  at  a  discount  for  coin,  the  same  as  suspended  bank 
notes. 

The  Supreme  Courts  of  New  York,  Pennsylvania,  Illinois, 
Ohio,  Wisconsin,  and  all  other  States  where  any  case  has 
come  up  for  decision,  have  decided  the  legal  tender  notes 
constitutional.  There  has  never  been  any  decision  against 
them  by  any  court  as  legal  tender  for  all  debts  contracted 
since  their  issue.  The  only  decision  that  they  were  not  con- 
stitutional, for  debts  contracted  before  their  issue,  has  been 
overruled  by  a  subsequent  decision. 

The  short  method  of  meeting  all  so-called  arguments 
against  the  constitutionality  of  legal  tender  notes  is,  to  refer 
to  the  legislation  of  Congress  from  1791  down  to  this  time  ; 
and  demand  the  authority  of   the   Constitution  for  alloying 


30  OUR  MONEY  WARS. 

gold  and  silver  coin ;  and  for  the  issue  of  copper,  tin,  zinc, 
and  nickel  money,  about  which  the  Constitution  says  not  one 
word.     This  will  give  them  something  to  think  of. 

French  Assignats. — As  the  failure  of  the  French  assig- 
nats  is  assigned  by  bullion  advocates  as  a  reason  why  legal- 
tender  Treasury  notes  of  the  United  States  must  fail,  we  will 
briefly  consider  these  assignats  in  the  light  of  history. 

i.  These  assignats  were  issued  by  the  Revolutionary  Gov- 
ernment of  France  in  1790,  and  after  that  time.  They  were  not 
based  upon  the  faith,  credit,  or  revenues  of  the  nation  as  our 
legal  tenders  are,  but  upon  the  confiscated  estates  of  priests 
and  nobles.  These  estates  were  assigned  or  set  apart  by  the 
Government  as  security  for  circulating  notes.  They  had  no 
basis  but  these  lands. 

2.  Up  to  1792,  only  1,200,000,000  of  francs,  or  about 
$240,000,000  had  been  issued.  This  sum  was  not  beyond  the 
wants  of  business,  and  was  not  in  excess  of  population.  So 
long  as  the  issue  was  not  over  this  sum,  the  money  never 
went  below  90  cents  in  the  dollar,  notwithstanding  the  un- 
certainty as  to  the  duration  of  the  Government  and  the 
security  upon  which  the  notes  were  based. 

3.  But  encouraged  by  the  success  attending  the  money, 
the  Government  supposed  the  .issue  could  be  extended  to  any 
amount.  They  therefore,  issued  45,578,000,000  francs,  or 
some  $9,000,000,000,  based  upon  the  same  security.  So  great 
was  the  confidence  of  the  people  in  their  leaders  that  with 
this  immense  issue,  beyond  the  needs  of  the  people,  the 
money  was  worth  60  cents  in  the  dollar  for  coin,  and 
so  remained  for  a  considerable  time. 

4.  But  a  large  amount  of  the  money  was  counterfeited  by 
the  enemies  of  the  money,  and  circulated  among  the 
people.  It  was  difficult  to  distinguish  the  genuine  from  the 
counterfeit.  The  revolutionary  Government  was  becoming 
divided,  and  some  of  the  leaders  caused  others  to  be  put  to 
death.  It  was  apparent  to  all  thinking  minds  that  the 
Government  must  soon  end,  and  the  estates  upon  which 
the  money  was  based  would,  it  was  supposed,  be  restored  to 
those  from  whom  they  had  been  taken,  and  the  money 
would,  therefore,  be  of  no  value.  These  considerations 
caused  the  money  to  fall  till  it  took  $18  to  pay  for  one  of 
coin.  The  impending  fall  of  the  Government  caused  the 
money  to  depreciate  still  more.     The  Government  issued  an 


OUR  MONEY  WARS.  31 

edict  requiring  it  to  be  received  and  paid  at  the  price  to 
which  it  had  fallen,  and  authorized  the  entry  of  all  confis- 
cated lands  therewith  at  that  price.  This,  with  the  other  causes, 
destroyed  its  credit  altogether,  and  it  went  out  of  use  in 
1795.  As  authority  for  these  facts,  we  refer  to  vol.  ii.  of  the 
American  Cyclopedia,  page  30,  and  to  French  history  of 
the  times,  which  we  think  is  a  little  colored  against  assignats. 

The  French  Government  issuing  it  was  not  only  a  revolu- 
tionary government,  but  it  became  a  professed  republic, 
surrounded  by  monarchies.  Had  it  been  a  true  republic, 
established  upon  proper  principles,  and  administered  by  men 
of  prudence  and  moderation,  it  would  not  have  been  per- 
mitted to  live  long.  The  monarchies  of  Europe  would  have 
combined  for  its  overthrow.  But  when  the  French  people 
deposed  their  king,  declared  for  a  republic,  and  placed 
themselves  under  the  leadership  of  Robespierre,  Danton,  and 
others,  they  exchanged  their  former  despots  for  worse  ones. 
The  reign  of  these  men  was  one  of  terror  and  blood  instead 
of  peace  and  justice,  law,  order,  and  liberty. 

The  basis  of  this  money  was  real  estate,  which,  if  of  the 
right  kind,  with  good  titles,  is  the  best  of  security  for  ulti- 
mate payments,  but  not  suitable  for  a  basis  of  circulation,  be- 
cause it  takes  too  long  to  convert  it  into  money.  But  these 
confiscated  estates  were  really  no  security  at  all.  The  Govern- 
ment had  no  title  to  them,  and  could  not  confer  one  upon  pur- 
chasers. These  estates  had  been  violently  taken  from  those 
having  legal  titles  to  them,  who  held  them  under  vested 
rights.  Every  reflecting  man  knew  that  as  soon  as  the 
Government  was  changed,  the  most  of  the  estates  would  be 
returned  to  their  rightful  owners.  Who  could  expect  money 
based  upon  such  a  foundation  to  remain  good  ?  The  matter 
of  astonishment  is,  not  that  this  money  went  down,  but  that 
it  was  current  for  any  considerable  length  of  time.  The  fact 
known  to  all,  that  the  estates  had  been  unlawfully  taken 
from  their  owners  by  the  men  in  power,  was  sufficient  to 
create  the  fear  that  they  might,  by  the  same  men,  be  violent- 
ly taken  from  those  who  purchased  them. 

The  First  United  States  Bank. — The  First  Bank  of 
the  United  States,  under  the  Constitution,  was  chartered 
Feb.  25,  1 79 1,  by  Congress.  It  was  the  work  of  the 
Federals,  who  hated  and  wished  to  avoid  Treasury  notes. 
But  they  were  "  hoist  by  their  own  petard  "  ;  for    it    was    so 


32 


OUR  MONEY  WARS. 


managed  that  its  notes  served  nearly  the  same  purpose  as 
Government  legal  tenders.  The  capital  was  $10,000,000. 
One-fifth  of  the  stock  was  owned  by  the  United  States,  and 
$8,000,000  by  the  people.  Six  of  the  $8,000,000  were 
Government  indebtedness,  and  $2,000,000  money. 

The  tenth  section  of  the  charter  made  the  notes  of  the 
bank  those  of  the  nation,  by  providing  that  for  twenty  years 
they  should  be  received  for  all  dues  to  the  Government.  The 
law  placed  the  Government  money  in  this  bank,  and  there  it 
remained — subject  to  the  warrants  of  the  treasurer.  The 
bank  received  the  Government  revenues,  and  paid  the 
Government  debts.  In  reality,  the  bank  was  the  Treasury, 
and,  so  far  as  finance  was  concerned,  the  Government  was 
the  bank.  The  name  and  credit  of  the  United  States  accom- 
panied every  note,  throughout  the  world.  All  the  copper, 
silver,  gold,  and  paper  money  of  the  nation  was  in  the  bank. 
The  Government  kept  no  money  at  the  Treasury.  The 
people  who  held  and  used  the  notes  did  not  inquire  whether 
the  bank  paid  or  did  not  pay  coin.  It  was  a  matter  of  in- 
difference to  them.  They  did  not  wish  coin.  The  notes  which 
the  Government  had  bound  itself  to  receive  for  twenty  years, 
whether  the  bank  paid  coin  or  not,  were  satisfactory  to  them. 
They  did  not  look  to  or  regard  the  bank.  They  confided  in 
the  Government,  which  did  not  deceive  them.  In  those  clays 
the  Government  kept  contracts  made  with  the  people,  as  well 
as  with  nations  and  institutions.  There  was  little  or  no  de- 
mand for  coin  in  business.  It,  therefore,  went  into  the  bank, 
and  into  the  Treasury,  which  was  the  bank.  The  notes  went 
out,  the  coin  went  in.  [See  "  Example  of  France."]  When 
drafts  of  the  treasurer  upon  the  bank  were  presented,  for 
which  coin  could  be  demanded,  the  notes  were  generally  paid 
instead  of  coin,  being  preferred  because  of  safety,  uniformity, 
and  convenience.  The  coin  remained  in  the  bank ;  the  notes 
went  out  among  the  people.  The  charter  of  this  bank  ex- 
pired in  181 1.  When  the  era  of  State  banks  came,  the  above 
style  was  reversed.  The  people,  having  small  confidence  in 
the  banks,  got  all  the  coin  they  could  from  them,  so  the  notes 
went  into  the  banks,  and  the  coin  went  out  among  the  people. 

The  power  to  lay  and  collect  taxes  and  duties  implies  the 
power  to  provide  the  people  the  money  in  which  to  pay  those 
taxes  and  duties  ;  and  also  to  say  in  what  kind  of  money 
they  shall  be  paid.    That  the  framers  of  the  Constitution  did 


OUR  MONEY  WARS.  33 

not  intend  that  these  taxes  and  duties  should  be  paid  in  gold 
and  silver  coin  only,  is  evident  from  the  fact  that  from  1791 
to  1840  no  law  was  ever  passed  by  Congress  requiring  them  to 
be  paid  in  gold  and  silver  coin.  From  1791  to  181 1  taxes  and 
duties  were  paid  in  the  notes  of  the  Bank  of  the  United 
States,  and  so  on.     The  law  of  1840  was  repealed  in  1841. 

Neither  of  the  United  States  banks  ever  suspended.  This 
cannot  be  said  of  any  other  banks  of  issue  in  the  world. 

The  United  States  Mint. — An  Act  of  April  2,  1792, 
created  the  Mint,  and  provided  for  the  coining  of  gold,  silver, 
and  copper  coins  of  the  United  States.  The  relation  be- 
tween gold  and  silver  created  by  this  act  was  fifteen  pounds 
of  silver  to  one  of  gold.  Gold  was  made,  by  this  law,  11-12 
fine,  the  same  as  English  gold.  The  silver  coins  were  made 
896^2  parts  pure  and  103*4  parts  alloy,  in  the  1000  parts. 
The  silver  dollar  was  made  to  contain  416  grains  of  this 
compound  :  371^  grains  being  pure  silver,  and  43^  grains 
copper.  Twenty-seven  grains  gold,  11-12  fine,  were  made 
the  value  of  the  silver  dollar  of  416  grains.  The  dollar  was 
made  the  unit  of  value,  and  of  the  money  of  account ;  in 
which  all  proceedings  in  courts  of  justice  were  to  be  kept. 
Gold  was  not  made  a  dollar,  but  27  grains  were  made  the 
value  of  a  dollar  and  legal  tender,  at  that  valuation,  the 
same  as  silver.  All  coins  of  gold,  silver,  and  copper  were 
made  full  legal  tender. 

When  the  question  of  the  establishment  of  the  Mint  was 
under  consideration,  by  the  founders  of  the  Government, 
Mr.  Hamilton,  in  his  communication  to  the  House  of  Repre- 
sentatives, Jan.  28,  1791,  said  :  "Upon  the  whole,  it  seems 
to  be  most  advisable,  as  has  been  observed,  not  to  attach 
the  unit  exclusively  to  either  of  the  metals  ;  because  this 
cannot  be  done  effectually  without  destroying  the  office  and 
character  of  one  of  them  as  money,  and  reducing  it  to  the 
situation  of  mere  merchandise.  *  *  *  To  annul  either  of  the 
metals  as  money  is  to  abridge  the  quantity  of  circulating 
mediums,  and  is  liable  to  all  the  objections  which  arise 
from  the  comparison  of  the  benefits  of  a  full,  with  the  evils 
of  a  scanty,  circulation." 

This  is  the  way  in  which  we  "happened"  to  get  our  stan- 
dard silver  dollar :  Mr.  Hamilton  had  a  number  of  the  old 
Spanish  milled  dollars,  as  then  in  circulation,  assayed,  and 
they  were  found  to  contain  371^  grains  of  pure  silver,  and 
33 


34 


OUR  MONEY  WARS. 


therefore  the  new  dollar  was  made  to  contain  that  amount — 
so  that  the  money  unit  of  the  colonies,  as  at  that  time  in  cir- 
culation, was  continued  as  the  money  unit  under  the  new 
constitution. 

Money  of  Account. — What  is  called  "  The  Money  of 
Account  " — in  pur  country,  dollars,  dimes,  etc. — was  estab- 
lished here  in  1792.  In  some  countries  it  is  only  an  idea. 
The  British  pound  is  ideal. 

From  about  1660  until  1816,  the  pound  sterling  had  no 
corresponding  piece  of  coin.  The  English  guinea  had  been 
intended  to  represent  a  pound.  But  it  had  not  been  prop- 
erly adjusted ;  and,  owing  also  to  the  fluctuations  in  the 
price  of  gold,  it  varied  in  value  until  1 7 17,  when  its  value 
was  fixed  at  21  shillings.  In  1816,  after  much  deliberation, 
it  was  decided  to  fix  the  weight  of  the  sovereign  at  five  pen- 
nyweights, three  grains,  and  623  thousandths  of  a  grain.  It 
is  manifest  that  the  whole  difficulty  was  in  establishing  a 
coin  whose  value  should  correspond  to  the  unit  of  value  of 
the  money  of  account  carried  in  the  minds  of  the  people. 
The  English  sovereign  has  since  been  changed  several 
times. 

The  people  of  the  United  States  have  undergone  a  similar 
experience  with  pounds,  shillings,  and  pence, — the  pounds 
varying  in  value  in  different  States,  from  4s.  8d.  to  8s.  to  the 
dollar. 

There  were  no  coins  in  existence  corresponding  to  these 
amounts.  These  different  units  of  value  had  their  origin  in 
various  causes,  which  we  will  not  stop  to  discuss  :  but  when 
industry  and  trade  had  become  sufficiently  advanced,  they 
became  fixed.  The  trade  of  the  colonies  with  the  West  In- 
dies had  introduced  into  the  country  a  considerable  amount 
of  Spanish  coins.  The  names  and  values  of  these  coins  did 
not  correspond  to  the  money  of  account  of  the  people  ;  and 
their  value  was  estimated  in  the  money  of  account  of  the 
several  colonies,  precisely  as  that  of  wheat,  or  any  other 
commodity,  is  estimated.  In  1792,  an  Act  was  passed  by 
Congress  with  a  view  to  establishing  a  uniform  money  of  ac- 
count throughout  the  country.  People  reckoned  in  pounds, 
shillings,  and  pence,  and  paid  in  Spanish  dollars.  It  will  be 
remembered  that  Continental  money  was  payable  in  "  Span- 
ish milled  dollars,  or  the  value  thereof  in  gold  or  silver." 
The  Act  of  Congress  of  April,    1792,  declared   "That  the 


OUR  MONEY  WARS.  35 

money  of  account  of  the  United  States  shall  be  expressed  in 
dollars  or  units ;  dimes  or  tenths ;  cents  or  hundredths  ; 
and  mills  or  thousandths :  *  *  *  and  that  all  accounts 
in  public  offices,  and  all  proceedings  in  the  courts  of  the 
United  States,  shall  be  kept  and  had  in  accordance  with  this 
regulation."  This  is  believed  to  be  the  first  time  that  a 
money  of  account  7cas  established  by  law : — money  of  ac- 
count having  in  all  other  nations  grown  up  in  the  minds  of 
•the  people. 

Sir  James  Stewart,  in  his  work  on  Political  Economy,  says  : 
— Money  which  I  call  money  of  account,  is  no  more  than  a 
scale  of  equal  parts  invented  for  measuring  the  respective 
values  of  things  vendible.  *  *  *  Money  of  account  per- 
forms the  same  office,  with  regard  to  the  value  of  things,  that 
degrees,  minutes,  seconds,  etc.,  do  with  regard  to  angles  ;  or 
as  scales  do  to  geographical  maps,  or  to  plans  of  any  kind. 
In  all  these  inventions,  there  are  some  denominations  taken 
for  the  unit.  In  angles  it  is  the  degree  ;  in  geography  it  is 
the  mile ;  in  plans  it  is  the  foot  or  yard ;  in  money  it  is  the 
pound,  livre,  florin,  etc.  The  degree  has  no  determinate 
length  ;  so  neither  has  that  part  of  the  scale  upon  plans  or 
maps  which  marks  the  unit  :  the  usefulness  of  these  being 
strictly  confined  to  the  marking  of  proportions.  Just  so  the 
unit  in  money  can  have  no  invariable  determinate  proportion 
to  any  part  of  value.  That  is  to  say,  it  cannot  be  fixed  in 
perpetuity  to  any  particular  quantity  of  gold  or  silver,  or  any 
other  commodity.  The  value  of  commodities  depends  upon 
circumstances, — their  value  ought  to  be  considered  as  chang- 
ing with  respect  to  one  another  only.  Consequently,  any- 
thing which  troubles  or  perplexes  the  ascertaining  if  these 
changes  of  proportion, — by  the  means  of  a  general  determi- 
nate and  invariable  scale,  must  be  hurtful  to  trade;  and  this 
is  the  infallible  consequence  of  every  vice  in  the  policy  of 
money  or  coin.  *  £  *  It  does  not  follow  from  this  adjusting 
of  the  metals  to  the  scale  of  value,  that  they  themselves 
should  therefore  become  the  scale .' 

The  Value  of  Foreign  Coins. — The  Act  of  February  9, 
1793,  regulates  the  value  of  foreign  coin  in  the  United 
States  (as  the  Constitution  provided  Congress  should  do)  ; 
making  them  money  of  this  country,  at  the  valuation  placed 
upon  them  by  this  law — for  the  time  stated  in  the  law.  Con- 
gress supposed  that  the  Mint,  which  they  had  created,  would 


36  OUR  MONEY  WARS. 

be  able  to  coin  into  United  States  money  all  the  gold  and 
silver  bullion  and  foreign  coins  in  three  years.  This  law, 
therefore,  provided  that  foreign  coins  should  not  be  money 
in  the  United  States  after  that  time. 

The  Foreign  Loans. — The  Act  of  March  3,  1795,  pro- 
vides for  taking  up  the  foreign  loan  made  to  us  by  France, 
Spain,  and  Holland  during  our  Revolutionary  struggle.  How 
different  was  the  course  pursued  by  the  Fathers  of  the  Revo- 
lution, and  the  founders  of  the  Republic,  from  that  of  our 
present  so-called  statesmen  !  Instead  of  making  a  foreign 
loan  to  pay  off  a  home  loan,  Congress  proposed  to  make  a 
home  loan  to  pay  off  this  foreign  loan,  which  was  made  as 
a  necessity.  Small  bonds  were  made  for  that  purpose  ;  so 
that  all  the  people  could  invest  in  them,  and  hold  them  as 
money.  One-half  per  cent,  was  allowed  the  people  at  home, 
over  and  above  what  was  being  paid  for  the  foreign  loan. 
"  In  this  way,"  Webster  says,  "  Hamilton  smote  the  rock, 
and  the  waters  gushed  forth."  "  He  touched  the  dead  bod„y 
of  credit,  and  it  sprang  to  life." 


OUR  MONEY  WARS.  37 


CHAPTER  V. 
1796  to  1806. 

The  Bank  of  Venice. — When  the  United  States  was  be- 
ginning to  feel  its  way  toward  the  goal  (not  yet  reached)  of 
a  sensible  system  of  money  and  finance,  Napoleon  was  un- 
wittingly destroying  the  wisest  system  ever  known  on  this 
earth.  In  1797,  he  seized  the  Bank  of  Venice,  of  which  the 
following  is  a  fair  description  : — 

In  1 17 1,  when  the  gallant  Republic  of  Venice  singly  with- 
stood the  shock  of  the  Asiatic  hordes,  that  threatened  to 
inundate  Europe,  Duke  Vitale  Michel  II.  called  on  the 
wealthy  citizens  to  contribute  to  a  loan  of  2,000,000  ducats, 
for  the  defense  of  the  State ;  the  sums  so  loaned  to  be  en- 
tered to  the  credit  of  the  contributors  on  the  books  of  the 
Republic.  These  credits,  being  divisible  and  transferable, 
grew  into  favor  as  a  currency,  performing  all  the  functions 
of  money,  and  rose  to  a  high  premium  above  gold  and  silver 
coin.  Such  was  the  origin  of  the  earliest  bank  of  history. 
In  1423,  a  law  fixed  the  agio  or  premium  at  20  per  cent.,  and 
directed  all  payments,  not  otherwise  agreed  on,  to  be  paid  at 
the  Bank  of  Venice  ;  while  at  the  same  time  it  discontinued 
the  four  per  cent,  interest  that  had  hitherto  been  promptly 
paid  on  the  credits.  This  per  cent,  agio  added  to  the  coin 
ducat  of  Venice  constituted  a  new  unit  of  value,  represented 
by  no  coin,  yet  maintaining  its  ideal  existence,  as  the  ducat 
of  the  Bank  of  Venice ;  and  rose  to  an  additional  agio, — 
termed  a  sur  agio, — of  20  to  30  per  cent.  It  continued  the 
favorite  currency  of  the  Adriatic  for  nearly  600  years ;  until 
the  remorseless  march  of  Napoleonic  despotism,  in  1797, 
crushed  the  Republic.  A  worthless  booty  was  found  in  the 
bank ;  for  it  had  no  coin  or  deposits,  but  only  a  faithful 
record  of  the  loans  that  more  than  600  years  before  the 
citizens  of  Venice  had  made,  to  preserve  the  life  of  the 
Republic.  France  repaid  the  citizens;  but  the  bank  and  the 
Republic  were  no  more.     There  was  the  money  of  a  republic 


38  OUR  MONEY  WARS. 

having  no  foundation  but  credit  on  the  books  of  a  department 
in  its  treasury  ;  with  no  coin  in  its  vaults,  and  not  bound  to 
make  that  credit  good  in  later  times,  by  any  payment  of 
interest  or  any  redemption  whatever ;  which  yet  stood  for 
hundreds  of  years  at  a  high  premium  over  gold  and  silver 
coin.  Plain  and  open  in  all  its  progress,  there  was  no  pecu- 
lation or  steal  in  any  of  its  processes. 

Stephen  Colwell,  in  his  great  work  '-  Ways  and  Means  of 
Payment,"  gives  a  digest  of  fourteen  authorities  about  that 
bank.  He  says  that  this  credit  money  amounted  to  $16,- 
000,000  when  Napoleon  seized  the  bank,  and  that  the 
interest  alone  saved  on  each  million  of  ducats  was  $6,250,- 
000,000,000 — at  four  per  cent,  for  four  hundred  years,  savings 
bank  interest.  He  adds  :  "  If  credits  had  been  convertible 
at  will  into  the  precious  metals,  the  agio  would  never  have 
originated,  much  less  have  attained  so  high  a  point.  For 
the  moment  holders  of  credits  advanced  the  price,  specie, 
if  a  legal  tender,  would  have  become  the  medium  of  payment, 
as  the  cheaper  medium.  If  the  same  mode  of  adjusting 
debts  were  resorted  to  now,  the  result  would  be  that  incon- 
vertible credits  would  go,  frequently,  to  a  high  premium  over 
gold  and  silver." 

Foreign  Coins. — The  mint  had  not  come  up  to  the  expec- 
tation of  Congress.  The  Act  of  Feb.  1,  1798,  therefore 
extended  the  legality  of  foreign  coins  for  three  years  longer; 
and  some  of  the  valuations  thereof  were  changed,  adding  to 
their  legal  tender  value. 

Small  Coins. — The  Act  of  April  24,  1800,  provides  for 
the  purchase  of  copper  to  coin  into  cents  and  half  cents, 
which  were  unlimited  legal  tender.  Copper  is  not  named  in 
the  Constitution. 


OUR  MONEY  WARS. 


39 


CHAPTER  VI. 
1806  to  1816. 

Foreign  Coins. — The  Act  of  April  io,  1806,  renewed  the 
legality  of  foreign  coins,  changing  the  value  of  many  of  them. 
These  laws  show  that  law  makes  and  unmakes  money. 
These  gold  and  silver  coins  were  money,  in  the  United 
States,  at  the  values  fixed  by  law;  and  they  differed  in 
value  under  the  different  laws,  showing  the  control  of  law 
over  them. 

Wild-cat  Banks. — By  this  time  wild-cat  State  banks  were 
in  full  bloom. 

In  March,  1809,  a  legislative  committee  of  the  State  of  Rhode 
Island  made  an  examination  into  the  affairs  of  the  P'armers' 
Exchange  Bank  of  Gloucester  ;  and  it  was  found  that  the 
bank  had  $580,000  of  its  notes  in  circulation,  and  only  $86.16 
in  its  vaults  for  their  redemption.  Before  the  end  of  the 
year,  a  general  suspension  of  the  banks  of  New  England 
took  place.  It  was  discovered  that  nearly  all  were  in  the 
same  condition, — no  specie,  and  nothing  to  show  but  worth- 
less notes  of  speculators. 

Fluctuation  of  Gold  in  England.— Currency  matters 
of  Europe  become  now  of  immense  interest,  in  connection 
with  the  Napoleonic  wars.  Worshipers  of  gold,  "  the  in- 
variable unit,"  are  invited  to  consider  the  following  state- 
ment of  its  variations  from  1810  to  1820  in  gold-worshiping 
England : — 

The  act  known  as  the  Peel  Act  of  1844  made  gold  receiv- 
able at  the  Bank  of  England  at  the  rate  of  £$  17s.  io.!d. 
per  ounce  of  pure  metal.  Doubleday's  Financial  History  of 
England,  p.  277,  has  the  following  statement  of  the  fluctu- 
ations of  gold  in  that  country,  for  the  ten  years  from  18 10  to 
1820,  compared  with  the  present  standard  price,  by  the  Peel 
Act  of  1844. 


40  OUR  MONEY  WARS. 


1816 £1  18s.     6d. 

1817 4     os.     od. 

1818 4     is.     5d. 

1819 4     3s.     od. 

1820 3   iys.io^d. 


1810 £\  5s.  od. 

1811 4  17s.   id. 

1812 5  8s.   od. 

1813 5  10s.  od. 

1814 5  is.  od. 

1S15 4  12s.  9d. 

1811. 

State  Banks. — In  this  year,  our  State  banks  (that  are 
always  ready  in  their  seraphic  wisdom  and  cherubic  un- 
selfishness to  furnish  us  just  what  currency  is  "  needed," 
according  to  certain  "  laws  of  nature,"  known  only  to  them) 
were  spreading  themselves  again.  That  terrible  hard  hitter, 
Bryant  of  Boston,  in  his  book  on  "  Money,"  gives  them  this 
rap  :— 

Some  who  are  ignorant  and  many  who  are  knaves  assert 
that  the  law  of  "supply  and  demand"  is  the  true  and 
adequate  governor  of  this  question.  That  the  assertion  is 
absolute  nonsense  is  shown  by  the  following  actual  facts  of 
our  financial  history.  In  181 1  the  volume  of  money  issued 
and  circulated,  by  the  old  system  of  State  banks,  was  $28,000- 
000.  In  1816  it  had  risen  to  $110,000,000;  in  1818  it  had 
fallen  to  $40,000,000  ;  in  1832  it  stood  at  $60,000,000  ;  in 
1837  it  reached  $150,000,000  ;  in  1843  it  had  sunk  to 
$58,000,000;  in  1847  it  was  $105,000,000  ;  in  1857  $215,000,- 
000;  in  1858  it  had  fallen  to  $150,000,000;  in  1865,  the 
legal  tender  and  bank  note  circulation  was  $1,199,565,231 
among  27,000,000  people  (rebel  States  excluded)  ;  and  in 
1875  was  $700,000,000  among  45,000,000  people.  When 
we  look  at  these  figures,  and  see  how  the  volume  of  our 
money,  under  the  law  of  "  supply  and  demand,"  has  bobbed 
up  and  down,  and  then  consider  that  it  is  the  inevitable  law 
that  values  must,  of  necessity,  swell  and  sink,  just  as  the 
volume  of  dollars  rises  or  sinks  ;  and  then  call  to  mind  the 
widespread  ruin  and  bankruptcy  in  which  the  country  was 
thereby  plunged ; — is  it  not  evident  that  no  one  but  an  idiot 
can  have  anything  further  to  say  about  the  law  of  supply 
and  demand  ? 

1812. 

When  the  war  with  England  began,  the  State  banks  were, 
of  course,  less   reliable   than   ever.     The  first   Bank   of   the 


OUR  MONEY  WARS. 


41 


United  States  went  out  of  existence  in  1811,  Congress  re- 
fusing to  grant  it  a  new  charter.  Many  State  banks  were 
established  during  the  life  of  this  national  bank,  and  hun- 
dreds grew  up  all  over  the  country  soon  after  the  re-charter 
of  this  bank  was  refused.  The  notes  of  the  State  banks 
were  then  the  principal  money  of  the  United  States.  These 
banks  attempted  to  supply  the  money  to  carry  on  the  war, 
agreeing  to  take  in  exchange  for  their  notes  6  per  cent,  bonds 
of  the  United  States  at  75  and  80  cents  on  the  dollar.  The 
banks  then  professed  to  pay  coin.  To  some  extent  the 
Government  received  money  from  the  banks  upon  these  con- 
ditions ;  but  through  the  influence  of  Mr.  Jefferson,  then  in 
private  life,  the  Government  was  induced  to  issue  Treasury 
notes,  which  bore  interest,  but  were  receivable  for  all  debts 
•due  the  United  States.  The  misfortune  with  most  of  those 
Treasury  notes  was  that  they  were  issued  in  sums  too  large 
to  use  as  money.  The  consequence  was,  the  acts  authorized 
the  Government  to  sell  these  Treasury  notes  to  banks,  and 
to  have  the  amount  thereof  placed  to  the  credit  of  the 
United  States,  to  be  paid  to  the  Government  in  the  notes  of 
the  banks.  The  banks,  therefore,  as  a  general  rule,  held  the 
Treasury  notes  and  received  the  interest,  while  the  Treasury 
held  and  paid  out  the  bank  notes.  This  act  was  against  the 
people. 

Interest-bearing  Treasury  Notes. — The  Act  of  June  3, 
181 2,  authorized  the  issue  of  $5,000,000  Treasury  notes,  to 
run  one  year,  bearing  5  and  2-5 th,  per  cent,  interest.  They 
were  made  receivable  for  all  debts  due  the  Government,  and 
were  to  be  paid  to  such  public  creditors,  and  other  persons, 
as  were  willing  to  receive  them.  They  might  also  be  used 
to  procure  loans  ;  or  might  be  placed  to  the  credit  of  the 
Treasury,  in  banks,  at  par  and  accrued  interest. 

The  Act  of  June  30,  181 2,  provided  that  the  moneys  of 
the  Government  might  be  deposited  in  State  banks  ;  and  they 
were  so  deposited.  The  banks  then  professed  to  pay  coin — 
a  profession  which  was  a  false  pretense. 


From  18 1 2  to  18 16  business  was  sustained  by  legal  tender 
Treasury  notes,  that  were  not  a  tender  to  the  people. 

Judge  Warwick  Martin,  speaking  of  notes  that  are  a  legal 
tender  to  the  Government,  but  not  to  the  people,  shows  the 
absurdity  of  this,  once  for  all,  as  follows  :  "  Unless  a  part  is 


42 


OUR  MONEY  WARS, 


greater  than  the  whole,  what  is  a  tender  to  the  whole  people, 
as  embodied  in  the  Government,  should  be  a  tender  to  in- 
dividuals." 

From  1812  to  1862,  when  the  exception  was  put  in  the 
legal  tender  act,  Treasury  notes  were  received  the  same  as 
gold  and   silver,  at  our  custom-houses.     Those  of    18 12,  '13. 

'i4,  '15,  '37.  '38,  ,'39»  '4o,  '41,  '42,  '43,  '45>  '46,  '47>  '48,  '57  and 
'60  were  so  received. 

1813. 

It  was  in  this  year  that  Jefferson,  writing  to  Epps,  defended 
Continental  money  and  Treasury  notes.      See  1776. 

The  Act  of  Fee.  25,  1813,  authorized  the  issue  of  10.000,- 
000  in  Treasury  notes,  similar  to  those  under  the  Act  of 
June  3,  1812. 

1814. 

Jefferson  Disgusted. — On  January  16,  1814,  previous 
to  the  crisis  of  that  year,  Jefferson  wrote  as  follows  : 
"  Everything  predicted  by  the  enemies  of  the  banks  in  the 
beginning  is  now  coming  to  pass.  We  are  to  be  ruined  by 
the  deluge  of  bank  paper,  as  we  were  formerly  by  the 
old  Continental  paper.  It  is  cruel  that  such  revolutions  in 
private  fortunes  should  be  at  the  mercy  of  avaricious  advent- 
urers, who,  instead  of  employing  their  capital — if  any  they 
have — in  manufacture,  commerce,  and  other  useful  pursuits, 
make  it  an  instrument  to  burden  all  the  exchanges  of  prop- 
erty with  their  swindling  profits, — profits  which  are  the  price 
of  no  industry  of  theirs.  *  *  *  And  what  have  we  purchased 
by  this  tax  of  $200,000,000,  which  we  are  to  pay  by  whole- 
sale, but  usury,  swindling,  and  new  forms  of  demoralization.'' 

Suspension  of  the  Banks. — In  the  early  part  of  18 14, 
the  banks  being  called  upon  for  further  loans  to  the  Govern- 
ment declined  to  make  them  unless  permitted  to  suspend 
specie  payments.  To  the  disgrace  of  the  United  States, 
these  conditions  were  submitted  to.  The  banks  suspended. 
The  Treasury  was  soon  filled  with  suspended  bank  paper, 
while  the  banks  were  filled  with  Treasury  notes.  The  latter 
were  as  good  as  coin.  The  former  were  nearly  worthless. 
This  condition  of  things  caused  a  great  demand  among 
bondholders  and  capitalists  for  a  bank  of  the  United  States. 
Jefferson  and  those  agreeing  with  him  insisted  that  instead 


OUR  MONEY  WARS.  43 

of  chartering  a  new  bank  the  Government  should  issue 
Treasury  notes,  as  the  permanent  money  of  the  country,  and 
should  ignore  all  banks. 

The  Act  of  March  4,  1814,  authorized  $10,000,000  in 
Treasury  notes,  similar  to  those  of  18 12  and  18 13.  No 
charge  was  to  be  made  to  the  Government  by  the  banks 
which  credited  these  notes. 


The  Act  of  March  14,  18 14,  authorized  the  placing  of 
Treasury  notes,  to  the  credit  of  the  Government  in  State 
banks,  at  their  face  and  accrued  interest;  though  the  banks 
were  then  suspended. 

An  Original  Greenbacker. — Many  beside  Jefferson  al- 
ready began  to  see  the  true  light. 

'On  November  12,  1814,  Mr.  Hall,  of  Georgia,  introduced 
into  the  House  of  Representatives  the  following  :  1  Re- 
solved, That  the  Committee  of  Ways  and  Means  be  directed 
to  inquire  into  the  expediency  of  authorizing  the  Secretary 
of  the  Treasury  to  issue  notes  convenient  for  circulation,  to 

the   amount  of  million   of  dollars,  under  such   checks 

as  may  be  thought  best  calculated  to  prevent  counterfeits  ; 
in  which  alone,  and  gold  and  silver,  shall  be  paid  all  taxes, 
duties,  imports,  or  debts  due,  or  which  hereafter  may  be- 
come due  to  the  United  States.  2.  Resolved,  That  the 
Treasury  notes  which  may  be  issued  as  aforesaid  shall  be  a 
legal  tender  in  all  debts  due,  or  which  may  hereafter  become 
due,  between  a  citizen  of  the  United  States  and  a  citizen  or 
subject  of  any  foreign  State  or  kingdom. 

Two  more  follow,  which  provide  for  the  funding  after 
twelve  months,  and  redeeming  in  coin.  This  system  was 
discarded  because  it  was  thought  to  be  too  expensive  ;  and 
a  National  Bank,  with  a  capital  of  $35,000,000  established, 
with  what  results  everybody  knows. 

Legal  Tender  to  Government. — The  Act  of  December 
26,  18 14,  authorized  the  issue  of  $25,000,000  in  Treasury 
notes,  in  place  of  a  loan  of  that  amount  previously  author- 
ized. Ten  millions  of  these  notes  were  to  be  applied  to  the 
payment  of  ten  millions  previously  borrowed.  The  notes 
were  to  run  one  year,  and  were  to  bear  five  2-5ths  interest. 
They  were  made  legal-tender  for  all  obligations  to  the 
Government,  and  to  be  otherwise  like  those  previously  is- 
sued. 


44  OUR  MONEY  WARS. 

How  Banks  are  Created. — Notwithstanding  the  con- 
stitutional prohibition  against  emitting  bills  of  credit, 
charters  incorporating  private  institutions  authorized  to  emit 
bills  of  credit  (bank  notes)  were  granted  by  the  Legislatures 
of  the  several  States  in  large  numbers ;  in  utter  disregard  of 
the  Constitution,  as  well  as  of  the  public  good.  In  Penn- 
sylvania, for  example,  25  charters,  incorporating  specie  basis 
banks  of  issue,  were  granted  during  the  session  of  1813; 
but  were  vetoed  by  the  Governor.  At  the  next  session  of 
the  Legislature,  in  18 14,  a  bill  was  passed,  over  the  veto  of 
the  Governor,  chartering  41  banks,  with  a  capital  of  $17,- 
000,000  :  37  of  them  went  into  operation  at  once,  and  six 
months  afterward  suspended  specie  payment.  The  manner 
of  obtaining  a  charter  was  very  simple.  A  petition  setting 
forth  "  the  wants  of  the  people,"  in  the  locality  where  the 
bank  was  to  be  established,  was  all  that  was  required ; 
political  influence  and  intrigue  accomplished  the  rest. 

1315. 

A  Fight  Against  Treasury  Notes. — The  Act  of  Feb- 
ruary 14,1815,  authorized  the  issue  of  $25,000,000  Treasury 
notes,  in  addition  to  other  issues.  Up  to  this  time,  the 
Secretaries  of  the  Treasury,  Mr.  Gallatin  and  Mr.  Crawford, 
had  complained  that  the  Treasury  notes,  so  far  issued,  were 
made  too  large  for  common  circulation,  though  their  stand- 
ing among  the  people  was  good ;  and  the  people  were  de- 
sirous of  having  them.  They  say  Treasury  notes  had  taken 
the  place  of  coin,  and  equalized  the  exchange  throughout 
the  country.  To  meet  the  wishes  of  these  Secretaries  and 
of  Jefferson  and  Madison,  as  well  as  of  the  people,  these 
$25,000,000  Treasury  notes  for  circulation  were  authorized 
and  issued.  The  most  of  them  were  required  to  be  less  than 
$100  in  denomination,  and  to  be  payable  to  bearer;  while 
those  of  $100  and  over  were  to  be  made  payable  to  order 
and  to  pass  by  indorsement,  and  were  to  bear  five  2-5ths  in- 
terest ;  but  the  smaller  ones  were  to  bear  no  interest.  They 
were  also,  for  the  first  time,  made  receivable  for  six  per  cent, 
interest  bonds.  They  were  made  to  circulate  as  money  and 
to  have  the  characteristics  of  coins,  but  they  were  not  re- 
deemable therein.  This  was  the  first  time  the  United  States 
ever  issued  such  Treasury  money.  In  addition  to  being 
convertible  into   bonds,   it  was  made   legal    tender    for   all 


OUR  MONEY  WARS.  45 

debts  due  the  United  States.  The  interest  notes  were  con- 
vertible into  bonds  also. 

The  banks  had  suspended  before  this  act  was  passed.  It, 
therefore,  provides  that  if  any  of  the  interest-bearing  Treasury 
notes  were  sold  to  banks  and  credited  to  the  Treasury,  the 
credits  must  be  in  coin.  Upon  these  terms  the  banks  did 
not  want  them.  These  notes,  after  being  paid  into  the 
Treasury,  were  to  be  reissued.  All  notes  previously  issued 
were,  under  the  laws  creating  them,  to  be  canceled,  after 
being  received  in  the  Treasury.  They  were  not  to  be  paid 
out  again.  But  these  notes,  made  specially  to  circulate  as 
money,  were  to  be  paid  out  to  all  who  were  willing  to  receive 
them,  which  included  all  the  people. 

One  peculiarity  in  all  the  Treasury  notes  issued  in  18 12, 
1-813,  1814,  and  1815,  was  that  although  the  Government 
was  compelled  to  receive  them  for  all  dues  and  demands, 
the  people  were  not  compelled  under  the  laws  to  receive 
them.  The  laws  made  it  optional  with  them  whether  to  re- 
ceive them  or  not.  But  that  the  people  preferred  them  to 
bank  notes  is  proved  by  the  fact  that,  though  not  compelled 
by  law  to  receive  them,  they  did  gladly  receive  and  hold 
them. 

But  so  long  as  Treasury  notes  of  the  Government  bore  in- 
terest and  were  receivable  for  all  debts  due  the  United 
States,  and  were  sold  to  the  banks,  and  payment  therefor 
made  in  bank  notes,  both  before  and  after  the  suspension, 
the  banks  and  bankers  were  very  well  satisfied  with  them. 
The  banks  had  the  most  of  these  Treasury  notes  and  were 
making  the  interest,  while  the  Government  and  the  people 
were  compelled  to  receive  the  bank  notes,  and  to  use  them. 
The  Treasury  notes  were  actually  better  than  coin.  The 
bank  notes  proved  to  be  almost  worthless.  But  when  these 
$25,000,000  Treasury  notes  of  small  denominations  were 
made  to  circulate  as  money  and  to  bear  no  interest,  the  in- 
dignation of  all  the  banks  in  the  country  was  aroused.  They 
saw  that  if  these  notes  went  out  among  the  people,  and  be- 
came the  money  of  the  country,  there  would  be  an  end  to 
the  circulation  of  bank  notes.  Such  was  the  truth.  There 
was,  therefore,  a  general  combination  in  New  England,  New 
York,  Delaware  and  Pennsylvania,  to  kill  off  these  Treasury 
notes  which  bore  no  interest.  The  old  Bank  of  the  United 
States,  chartered  in  1791,  the  charter  of  which  expired  and 


46  OUR  MONEY  WARS. 

was  not  renewed  in  1811,  was  then,  as  the  law  allowed,  clos- 
ing up  its  affairs.  The  debts  of  the  people  to  this  bank  were 
very  large.  The  Bank  was  pressing  for  payment.  The 
people  presented  these  Treasury  notes  which  did  not  bear 
interest  in  payment.  The  Bank,  to  destroy  the  credit  of  the 
notes,  and  to  force  the  recharter  of  a  National  bank,  refused 
to  receive  the  notes  of  the  Government  in  payments  to  the 
Bank.  As  the  Bank  would  not  receive  the  notes  from  the 
merchants,  the  merchants  were,  reluctantly,  compelled  to 
refuse  to  receive  them  for  debts  due  them  and  for  goods 
sold.  The  New  England  banks  and  those  in  Delaware  were, 
also,  as  deeply  involved  in  this  conspiracy  to  destroy  the 
credit  of  these  Treasury  notes  as  they  are  now.  The  em- 
bargo and  non-intercourse  laws  of  Jefferson  and  Madison 
had  destroyed  the  carrying-trade  of  New  England,  and  had 
caused  a  suspension  of  the  New  England  banks  in  1809  and 
1810.  The  people  of  New  England  were,  therefore,  greatly 
opposed  to  the  war  with  England.  They  did  all  they  could 
to  cripple  the  Government  in  carrying  it  on.  They  refused 
all  loans,  even  of  bank  notes,  and  were  very  hostile  to  all 
Treasury  notes,  especially  to  those  intended  to  take  the 
place  of  bank  notes,  as  those  of  1815  were. 

By  a  general  combination  between  State  banks,  the  old 
National  Bank,  bondholders,  and  bullion  brokers,  these  notes 
of  the  United  States  were  forced  to  a  discount  for  a  short 
time.  One  of  the  strongest  arguments  in  favor  of  having  all 
Treasury  notes  made  full  legal  tender  is  here  presented. 
Had  they  been  legal  tender  to  the  people,  as  well  as  to  the 
Government,  all  the  efforts  of  the  banks  and  brokers  to  re- 
ject them,  and  reduce  their  value,  would  have  been  fruitless. 
If  the  legal  character  were  removed  from  the  present  notes, 
the  National  banks  would  at  once  discredit  them. 

Immediately  after  these  efforts  of  the  banks  to  discredit 
Treasury  notes,  an  application  was  made  to  Congress  for  a 
charter  of  a  national  bank,  which  proposed  to  take  from  the 
Government,  as  part  of  its  capital,  $15,000,000  of  these  same 
Treasury  notes,  to  withdraw  them  from  competition  with 
bank  notes. 

Mr.  Madison  vetoed  the  bill,  principally  on  account  of  this 
provision.  But  $28,000,000  of  bonds  were  substituted  for 
Treasury  notes,  as  capital  of  the  Bank  ;  and  by  a  combina- 
tion of  the  Federal  party  and  a  few  Democrats,  the   Bank 


OUR  MONEY  WARS.  47 

was  chartered.  The  charter  provided  that  no  other  such 
bank  should  be  chartered  by  Congress  for  20  years.  This 
implied,  also,  that  all  Treasury  notes  intended  to  circulate  as 
money  should  be  withdrawn,  and  that  this  Bank  should 
furnish  all  the  national  paper  circulation  for  20  years.  For 
this  privilege  the  Bank  paid  $1,500,000.  This  contract,  on 
the  part  of  the  Government,  was  disgraceful ;  but  having 
been  made,  it  had  to  be  carried  out ;  and  it  was  carried  out. 

An  Old  Story. — The  Act  of  February  25,  i8i5,gave  that 
same  old  authority  to  the  Secretary  of  the  Treasury  as  to  selling 
Treasury  notes  to  State  banks,  and  having  the  proceeds 
placed  to  his  credit  therein.  When  the  banks  suspended  in 
1814,  they  were  well  supplied  with  Treasury  notes,  and  the 
Treasury  was  well  filled  with  bank  notes.  The  former  were 
good  beyond  doubt :  the  latter  were  very  doubtful,  and  proved 
mostly  worthless  in  the  end. 

Madison  on  Treasury  Notes.  — In  his  message  of  Decem- 
ber 5,  1815,  President  Madison  said,  speaking  of  the  need  of  a 
stable  and  sufficient  currency  :  "  If  the  operation  of  the 
State  banks  cannot  produce  this  result,  the  proper  operation 
of  a  National  bank  will  merit  consideration  ;  and  if  neither 
of  these  expedients  is  deemed  effectual,  it  may  be  necessary 
to  ascertain  the  terms  upon  which  the  notes  of  the  Govern- 
ment (no  longer  required  as  an  instrument  of  credit)  shall  be 
issued,  upon  motives  of  general  policy,  as  a  common  medium." 


In  1815,  Jefferson  gave  the  following  statement  of  the  num- 
ber of  banks  which  had  been  established  up  to  that  time: 

"  In  1 78 1  we  had      1  bank,  capital     $   1,000,000 

13,500,000 
"  18,642,000 

"  20,472,000 

"  29,112,000 

"  not  known 

And  at  this  time  (1815)  we  have  probably  100  banks." 
Paper  Money  Broke  the  Power  of  the  First  Napoleon 
at  Leipsic. — Waterloo,  in  18 15,  could  not  be  reached  by 
coin.  According  to  Sir  Archibald  Alison,  the  historian, 
"By  a  decree  on  September  30,  1813,  from  Peterswalden,  in 
Germany,  the  allied  sovereigns  issued  paper  notes,  which 
soon  passed  as  cash  from  Kamschatka  to  the  Rhine  ;  and 


1791 

"  "   6 

*794 

"  "  17 

1796 

"  "  24 

1803 

"  "  34 

1804 

"  "  66 

48  OUR  MONEY  WARS. 

produced  the  currency  which  brought  the  war  to  a  successful 
termination." 

Before  Geo.  S.  Coe,  the  Professor  Sumner  of  Wall  Street, 
writes  that  proposed  book  on  Finance,  he  had  better  read  up 
on  the  history  of  Europe.  Poor,  the  railroad  statistician, 
who  has  written  a  big  book  upon  money  and  dedicated  it  to 
Coe,  quotes  him  at  p.  551  as  making  the  following  misstate- 
ment :  "  The  capital  of  the  New  York  banks  thus  associated 
[in  1862]  made  an  aggregate  of  120  millions,  an  amount 
greater  than  the  Bank  of  England  and  the  Bank  of  France 
combined  :  each  of  whose  institutions  had  been  found  suffi- 
cient for  the  gigantic  struggle  of  those  great  nations,  from 
time  to  time,  in  conflict  with  all  Europe." 


OUR  MONEY  WARS.  49 


CHAPTER  VII. 

1816  to  1826. 
1816. 

The  Second  United  States  Bank.  —  The  Act  of 
April  10,  18 16,  chartered  the  second  Bank  of  the  United 
States,  with  a  capital  of  $35,000,000  composed  of  $21,000,- 
000  United  States  bonds,  and  $7,000,000  coin  and  bank 
notes.  The  Government  made  up  the  balance  by  taking 
$7,000,000  of  the  stock  ;  and  had  five  directors  in  the  institu- 
tion. The  notes  of  the  Bank  were  made  legal  tender  for  all 
dues  to  the  United  States.  The  charter  extended  20  years. 
The  Bank,  as  was  said,  paid  $1,500,000  for  its  charter.  Our 
modern  National  banks  don't  see  things  in  that  way.  This 
bank  had  some  Democrat  backing  ;  but  none  from  Jefferson 
and  Madison. 

Currency  Theories. — Dallas,  Secretary  of  the  Treasury, 
in  his  report  in  18 16,  says,  "  Whenever  the  emergency  occurs 
that  demands  a  change  of  system,  it  seems  necessarily  to 
follow  that  the  authority  which  was  alone  competent  to 
establish  the  national  coin,  is  alone  competent  to  create  a 
national  substitute." 

President  Madison  said,  in  his  Message  of  December  3, 
1816,  "For  the  interests  of  the  community  at  large,  as  well 
as  for  the  purposes  of  the  Treasury,  it  is  essential  that  the 
nation  should  possess  a  currency  of  equal  value,  credit,  and  use, 
wherever  it  may  circulate.  The  Constitution  has  intrusted 
Congress  exclusively  with  the  power  of  creating  and  regulat- 
ing a  currency  of  that  description." 

Foreign  Coins. — The  Act  of  February  20,  18 16,  renews  the 
value  of  foreign  coins,  for  three  years  again,  as  it  is  found 
impossible  to  run  them  through  the  mint  in  spite  of  their 
"  intrinsic  value. "  It  is  strange  that  Congress  was  con- 
stantly changing  the  value  of  these  coins  ;  and  limiting  the 
time  in  which  they  should  be  money.  If  gold  and  silver 
were  the  best  money,  and  depended  not  upon  law  but  upon 
4 


5° 


OUR  MONEY  WARS. 


weight  for  their  value,  why  all   these  laws  changing  their 
money  value  ? 

1817. 

Testing  Treasury  Notes. — As  the  Bank  of  the  United 
States  had  purchased  of  the  Government,  for  $1,500,000, 
the  monopoly  of  making  legal-tender  paper  money  for 
twenty  years  ;  and  as  many  of  the  Treasury  notes  of  1813, 
18 14  and  18 1 5  still  remained  in  the  hands  of  the  people,  the 
Bank  claimed  that  the  permitting  of  said  Treasury  notes  to 
remain  out  was  a  violation  of  contract  on  the  part  of  the 
United  States  :  and  Congress,  in  obedience  to  the  wishes  of 
the  Bank,  in  18 17,  called  in  all  of  said  notes,  providing  that 
they  should  not  be  received  at  any  place  but  in  the  Treasury. 
But  the  people  knew  that  Congress  possessed  no  such 
power  as  they  had  attempted  to  exercise.  They,  therefore, 
held  on  to  the  Treasury  notes,  as  they  now  do  to  legal- 
tender  notes. 

In  18 18,  a  firm  in  Boston  tendered  said  Treasury  notes  in 
payment  for  duties  on  imports,  for  which  they  had  previously 
been  received.  The  banks  in  Boston  then  had,  as  they  now 
have,  a  deadly  hostility  to  all  paper  money  issued  by  the 
Government.  The  district  attorney  in  Boston  was  glad  of 
the  opportunity,  which  the  law  gave  him,  to  instruct  the  col- 
lector of  the  port  not  to  receive  Treasury  notes  for  duties. 
They  were,  therefore,  refused  at  the  custom-house.  The 
Government  brought  suit'  for  the  duties.  The  merchant 
pleaded  a  tender  of  payment  in  Treasury  notes.  The 
Government  responded  that  Treasury  notes  were  not  legal 
tender. 

The  case  was  heard  by  Judge  Story,  in  1819.  His  review 
of  the  case  occupies  eighteen  pages.  He  gave  judgment  for 
the  defendants.  His  decision  is  that  "  Treasury  notes  were 
and  are  legal  tender  for  everything  for  which  the  law  makes 
them  receivable."  (2  Mason,  pp.  1  to  18.)  The  Government 
had  made  these  notes  receivable  for  all  debts  due  the  United 
States.  The  Government  could  not,  therefore,  go  back  on 
its  own  contract.  The  result  of  this  decision  was  to  keep 
the  Treasury  notes  in  the  hands  of  the  people,  the  Bank  to 
the  contrary  notwithstanding. 

Congress  endured  the  censure  of  the  Bank  until  1822, 
when,  upon  the  3d  of  May  of  that  year,  they  passed  another 


OUR  MONEY  WARS. 


51 


act  to  discredit  Treasury  notes  ;  so  that  the  people  might  be 
compelled  to  surrender  them ;  which  they  did  not  wish 
to  do. 

1818. 

A  legislative  committee  of  the  State  of  New  York 
made  the  following  report  in  1818:  "Of  all  aristocracies 
none  more  completely  enslaves  a  people  than  that  of  money ; 
and,  in  the  opinion  of  your  committee,  no  system  was  ever 
better  devised  to  perfectly  enslave  a  community  than  that  of 
the  present  mode  of  conducting  banking  establishments. 
Like  the  siren  of  the  fable,  they  entice  to  destroy.  They 
hold  the  purse-strings  of  society ;  and  by  monopolizing  the 
whole  of  the  circulating  medium  of  the  country,  they  form  a 
precarious  standard  by  which  all  property  in  the  country — 
houses,  lands,  debts  and  credits,  personal  and  real  estate  of 
all  descriptions — are  valued." 

1819. 

Legal  Tender  Discussions. — Judge  Story  declared  the 
Treasury  notes  legal  tender.  Sumner,  of  Yale,  says  that  this 
decision  was  as  great  an  outrage  as  the  Dred  Scott  decision. 
See  1817. 

1820. 

Wm.  H.  Crawford,  Secretary  of  the  Treasury,  in  his  re- 
port, February,  1820,  said:  "All  intelligent  writers  on  cur- 
rency agree  that  when  the  currency  is  decreasing  in  amount, 
poverty  and  misery  must  prevail." 

The  Act  of  May  15,  1820,  and  the  Act  of  March  3,  182 1, 
repealed  the  law  prohibiting  the  Bank  of  the  United  States 
(private)  from  loaning  the  Government  sums  over  $100,000  ; 
and  authorized  the  Secretary  of  the  Treasury  to  borrow  of 
said  bank  $8,000,000  at  five  per  cent. 

Peel's  Resumption. — In  1820  came  Peel's  Resumption  of 
Specie  in  England,  after  25  years  without  coin  payments. 
The  elder  Peel  had  built  up  the  family  by  cotton  spinning, 
and  was  a  wise,  practical  old  man.  When  his  son  performed 
his  "  great  and  only  "  Resumption  Act,  the  father  said,  "  My 
son,  you  have  enriched  your  family  and  your  class,  but  you 
have  nearly  ruined  your  country."  Ricardo,  the  Jew  banker 
and  economist,  was  largely  responsible  for  this  terrible  deed. 
When  specie  was  only  five  per  cent,  premium,  he  argued  that 


52  OUR  MONEY  WARS. 

a  forced  specie  resumption  would  cause  only  a  five  per  cent, 
reduction  of  values,  while  Sir  William  Heygate  contended  that 
it  would  be  at  least  five  times  as  much.  Events  proved  that 
Sir  William  was  right,  and  Ricardo  frankly  confessed  as 
much  when  he  said  (See  "  Duncan's  History  of  the  Bank 
Charter,"  p.  1 10)  :  "  Ay,  Heygate,  you  and  the  few  others  who 
opposed  us  on  cash  [specie]  payments  have  proved  right.  I 
said  the  difference  would  be  only  five  per  cent.,  and  you  said 
at  the  least  it  would  be  25  per  cent." 

And  yet,  our  college  professors  and  other  so-called  teach- 
ers of  political  economy  continue  to  peddle  out,  in  the  inter- 
est of  the  usurer,  the  discarded  theories  of  Ricardo  and 
other  mischievous  sophists,  as  scientific  truths  ;  while  care- 
fully suppressing — also  in  the  interest  of  the  usurer — their 
disavowal  and  denial  of  the  same.  One  consequence  of  this 
was  seen  in  the  fact  that  our  American  financial  quacks 
made  the  same  false  statement  when  our  Greenbacks  had 
nearly  reached  parity  with  gold  ;  and  their  persistence  in  Re- 
sumption produced  the  same  awful  effects. 

This  same  Ricardo,  in  one  of  his  "  lucid  intervals,"  uttered 
the  following,  to  the  shame  and  confusion  of  all  our  Sumners 
and  Shermans  :  "  A  regulated  paper  currency  is  so  great  an 
improvement  in  commerce  that  I  should  greatly  regret  if 
prejudice  should  induce  us  to  return  to  a  system  of  less  util- 
ity. The  introduction  of  the  precious  metals  for  the  pur- 
poses of  money  may,  with  truth,  be  considered  as  one  of  the 
most  important  .steps  toward  the  improvement  of  commerce 
and  the  arts  of  civilized  life.  But  it  is  no  less  true  that,  with 
the  advancement  of  knowledge  and  science,  we  discover  that 
it  would  be  another  improvement  to  banish  them  again  from 
the  employment  to  which,  during  the  less  enlightened  period, 
they  had  been  so  advantageously  applied." 

A  word  more  from  Sumner's  description  of  Beel's  Resump- 
tion, before  I  give  the  real  facts  from  Sir  A.  Alison,  Double- 
day  and  Miss  Martineau.  He  says  of  the  debates  before  the 
bill  was  passed,  that  it  was  opposed  by  "  the  practical  bank- 
ers and  city  men,  and  the  great  mass,  who  did  not  understand 
the  matter.  *  *  *  The  city  men  had  a  theory  of  their 
facts.  It  was  really  one  theory  against  another ;  the  one 
drawn  from  a  narrow  routine  [business  experience,  S.  L.],  the 
other  a  philosophical  and  scientific  generalization,  from  a  broad 
range  of  facts."     O  Lord,  how  long  ? 


OUR  MONEY  WARS.  53 

Here  are  the  facts.  During  the  wars  with  Napoleon,  and 
after  they  were  over,  for  nearly  20  years,  the  Bank  of  Eng- 
land suspended  specie  payments.  But  in  18 19,  after  four 
years  of  peace,  the  value  of  paper  currency  rose  to  be  only 
six  per  cent,  below  coin.  Peel  and  Ricardo  urged  upon  Par- 
liament resumption  in  four  years.  They  said,  as  some  said 
here,  in  1875  :  "  We  are  almost  at  the  point  of  resumption  ; 
we  have  already  discounted  our  sufferings.  It  is  only  a 
question  of  three  per  cent."  Ricardo  said  :  "  The  whole  dif- 
ficulty would  be  in  raising  the  value  of  the  currency  three 
per  cent." 

Though  wise  business  men  protested,  though  the  Governor 
and  directors  of  the  Bank  of  England  warned  Parliament  of 
the  danger  of  contracting  the  currency — as  they  must  be 
compelled  to  do  to  resume  in  four  years — such  was  the  influ- 
ence of  Peel  and  Ricardo,  that  they  carried  "  Peel's  Resump- 
tion Act "  through  the  House  of  Commons  by  a  unanimous 
vote.  But  one  man  stood  out  against  it ;  and  they  even  per- 
suaded him  to  leave  the  chamber  when  the  vote  was  taken, 
so  that  it  would  appear  unanimous. 

Sir  Archibald  Alison,  in  his  history,  tells  the  sad  story  of 
the  result :  "  The  effect  of  this  extraordinary  piece  of  legis- 
lation was  soon  apparent.  The  industry  of  the  nation  was 
speedily  congealed,  as  a  flowing  stream  is  by  the  severity  of 
an  Arctic  winter.  *  *  *  The  entire  circulation  of  Eng- 
land fell  from  $232,545,000  in  1818  to  $142,757,000  in  182 1. 
The  effects  of  this  sudden  and  prodigious  contraction  of  the 
currency  were  soon  apparent ;  and  they  rendered  the  next 
three  years  a  period  of  ceaseless  distress  and  suffering  in  the 
British  Islands."  The  discounts  in  the  Bank  of  England, 
— which  in  1810  had  been  $115,000,000,  and  in  1815  not  less 
than  $103,000,000, — sank,  in  1820,  to  $23,360,000,  and  in 
1821  to  $13,610,000.  The  effect  upon  prices  was  not  less 
immediate  and  appalling.  The  rate  of  wages  fell  one-half. 
"  From  the  tremendous  reduction  in  the  price  of  land,"  says 
Doubleday,  "  which  now  took  place,  the  estates  barely  sold 
for  as  much  as  would  pay  off  the  mortgages ;  and  the  owners 
were  stripped  of  all,  and  made  beggars." 

Resumption  in  England  is  thus  described  in  Doubleday's 
History  : — We  have  already  seen  the  fall  in  prices  pro- 
duced by  the  immense  narrowing  of  paper  circulation. 
The  distress,  ruin  and  bankruptcy  which  now  took  place 


54 


OUR  MONEY  WARS. 


were  universal, — affecting  the  great  interests  both  of  land 
and  trade  ;  but  especially  among  land-owners, — whose 
estates  were  burdened  by  mortgages,  settlements,  legacies, 
etc., — the  effects  were  most  marked,  and  out  of  the  ordinary 
course.  Before  the  close  of  the  year  1S19,  the  distress  became 
insufferable.  Great  meetings  were  held  throughout  England 
and  Scotland,  during  the  summer.  In  August,  60,000  peo- 
ple,— men,  women  and  children, — assembled  near  Man- 
chester. A  collision  occurred  between  the  people  and  the 
troops,  in  which  a  number  were  killed  and  many  wounded. 
This  created  intense  excitement,  and  the  meetings  of  the 
people,  held  in  Liverpool,  York,  Leeds,  and  various  other 
cities,  were  attended  by  vast  multitudes  of  suffering  people, 
demanding  vengeance.  Serious  riots  occurred,  which  were 
only  quelled  by  military  force.  In  1820,  a  conspiracy  was 
discovered,  which  had  for  its  object^he  murder  of  all  the 
King's  ministers ;  and  which  was  only  frustrated  through 
the  cowardice  of  one  of  the  conspirators,  who  betrayed  his 
associates.  Military  training  went  on  among  the  people, 
and  the  Government  was  obliged  to  provide  a  large  military 
force,  to  prevent  an  outbreak. 

"  On  Sunday  morning,"  says  Alison,  "  a  treasonable 
proclamation  was  found  placarded  all  over  the  streets  of 
Glasgow,  Paisley,  Stirling  and  the  neighboring  towns  and 
villages  :  in  the  name  of  a  provisional  government  calling  on 
the  people  to  desist  from  labor  ;  on  all  manufacturers  to  close 
their  workshops  ;  and  on  all  the  friends  of  their  country  to 
come  forward  and  effect  a  revolution  by  force,  with  a  view 
to  the  establishment  of  an  entire  equality  of  civil  rights. 
Strange  to  say,  this  proclamation — unsigned  and  proceed- 
ing from  an  unknown  authority — was  widely  obeyed.  Work 
immediately  ceased ;  the  manufactories  closed  from  the 
desertion  of  workmen  ;  the  streets  were  filled  with  anxious 
crowds,  eagerly  expecting  news  from  the  South.  The 
sounds  of  industry  were  no  longer  heard  ;  and  200,000  per- 
sons, in  the  busiest  districts  of  the  country,  were  thrown 
into  a  state  of  compulsory  idleness,  by  the  mandates  of  an 
unseen  and  unknown  power." 

5,000  troops  were  immediately  assembled  at  Glasgow, 
and  the  insurgents  were  overawed.  Before  the  end  of  the 
year,  the  Government  had  increased  its  volunteer  force  to 
35,000  men,     "Without  doubt,"  says  Alison,  "this  power- 


OUR  MONEY  WARS.  55 

ful  volunteer  force,  organized  especially  in  the  manufactur- 
ing districts,  at  this  period, — and  the  decisive  demonstration 
is  afforded  of  moral  and  physical  strength  on  the  part  of  the 
Government, — was  the  chief  cause  through  which  Great 
Britain  escaped  an  alarming  convulsion." 

The  preparatory  steps  taken  for  this  consolidation  of  the 
money  power — which  were  attended  with  almost  incon- 
ceivable horrors — are  thus  delineated  by  Miss  Harriet 
Martineau  :  "  It  is  not  he  who  sees  from  afar  the  clouds  of 
dust  from  an  earthquake,  and  who  faintly  hears  the  mur- 
murs of  confused  sounds, — and  who  knows  that  so  many 
churches  and  so  many  dwellings,  and  even  so  many  people, 
have  perished, — that  can  feel  the  deepest  horror  of  the  scene. 
It  is  rather  he,  who,  in  some  narrow  street,  meets  the 
spectacle  of  the  writhing  of  a  crushed  sufferer  here,  a  child- 
less mother  there,  a  surviving  lover,  a  forlorn  infant,  wailing 
among  the  ruins  and  flames,  who  has  the  best  understand- 
ing of  what  has  befallen.  And  so  it  was  with  this  social 
convulsion  in  England.  There  are  some,  now,  of  the  most 
comfortable  middle-class  order,  who  cannot  think  of  that  year 
without  bitter  pain.  They  saw  many  parents  grow  white- 
haired  in  a  week's  time ;  lovers  parted  on  the  eve  of  mar- 
riage ;  light-hearted  girls  sent  forth  from  the  shelter  of  home, 
to  learn  to  endure  the  destiny  of  the  governess  or  the  seam- 
stress ;  governesses  too  old  for  a  new  station,  going  actually 
into  the  workhouse ;  rural  gentry  quitting  their  lands,  and 
whole  families  relinquishing  every  prospect  in  life,  and 
standing  as  bare  under  the  storm  as  Lear  and  his  strange 
comrades  on  the  heath.  They  saw  something  even  worse 
than  all  this.  They  saw  the  ties  of  family  honor  and  har- 
mony snapped  by  the  strain  of  cupidity  at  first,  and  dis- 
content afterward,  and  the  members  falling  off  from  one 
another  as  enemies.  They  saw  the  hope  of  the  innocent,  the 
faith  of  the  pious,  the  charity  of  the  generous,  the  integrity 
of  the  trusted,  give  way.  They  saw  the  most  guilty  re- 
warded, and  the  most  virtuous  involved  as  deeply  as  any  in 
the  retribution.  But  it  would  be  an  endless  task  to  adduce 
the  sorrows  of  that  time  ;  nor  can  their  issue  ever  be  recog- 
nized. Still,  the  depression  did  pass  away.  Our  ships  were, 
once  more,  abroad  upon  the  sea ;  and  the  clack  of  the  loom 
and  the  roar  of  the  forge  were  again  heard  in  our  towns, 


56  OUR  MONEY  WARS. 

But  the  heart-wounds  of  such  a  time  can  no  more  be  healed 
than  the  whitened  hair  can  resume  its  color." 

A  Parallel.— The  following  description  of  the  condition 
in  the  United  States  in  1820,  reminds  one  of  the  way  in 
which  specie  was  resumed  in  1879,  at  the  corner  of  Wall  and 
Nassau  Streets,  only,  in  sums  of  $50  and  upward.  In  the 
South  the  banks  still  pretended  to  pay  specie.  But  this 
account  of  the  way  in  which  they  did  business  in  some  locali- 
ties would  hardly  justify  the  pretension.  Here  is  the  style. 
It  was  first  started  at  Darien,  Ga.  "  One  who  presented  a 
bill  had  to  make  oath,  in  the  bank,  that  the  bill  was  his  own, 
and  that  he  was  not  an  agent  for  any  one.  He  was  re- 
quired to  make  this  oath  before  the  cashier  andyfz'^  directors  ! 
and  had  to  pay  $1.37^  expenses  on  each  bill." 

1822. 

Act  of  May  3,  1822,  tries  again  to  call  in  Treasury  notes. 
See  1817. 


OUR  MONEY  WARS.  57 


CHAPTER  VIII. 

1826  to  1836. 
1828. 

The  Steady  Currency  of  France- — As  early  as  1828, 
the  steadiness  of  French  money  was  being  noticed  in  Eng- 
land. Huskisson  said:  "  If  they  wish  to  prove  the  value  of 
a  steady  and  unchangeable  currency  they  had  it  in  the  his- 
tory of  France :  that  country  had  been  twice  invaded  by  a 
foreign  army,  her  capital  had  been  twice  taken  possession  of, 
and  she  was  obliged  to  pay  large  sums  to  foreign  countries; 
but  they  had  a  steady  metallic  currency  ;  and  however  situa- 
tions might  have  affected  the  rest,— however  the  extensive 
contractor  might  have  been  injured  or  ruined, — the  body  of 
the  population  remained  unoppressed.  This  was  attributed 
to  the  permanent  footing  upon  which  the  currency  of  the 
country  had  been  established." 

Huskisson  did  not  see  that  it  was  abundance  of  Govern- 
ment money,  and  doing  business  with  money  instead  of  checks 
and  notes,  that  kept  the  French  safe. 

1829. 

Gen.  Jackson  takes  Hold.— There  is  a  curious  lack  of 
Governmental  financial  events  and  Congressional  acts  about 
money  from  1820  to  the  time  when  President  Jackson's 
strong  hand  gets  hold.  The  United  States  Bank  has  mean- 
while had  its  own  way — a  pretty  aristocratic  way  for  a  private 
corporation. 

In  his  Message  of  December  8,  1829,  President  Jackson 
alleged  that  the  United  States  Bank  had  failed  to  furnish  a 
sound  and  uniform  currency ;  and  he  proposes  that  the 
Treasury,  shall  do  what  the  Bank  has  failed  to  do.     He  says  : 

"  The  charter  of  the  Bank  of  the  United  States  expires  in 
1836  ;  and  its  stockholders  will,  most  probably,  apply  for  a 
renewal  of  their  privileges.  In  order  to  avoid  the  evils  re- 
sulting from  precipitancy  in  a  measure  involving  such  impor- 
tant principles  and  such  deep  pecuniary  interest,  I  feel  that 


58  OUR  MONEY  WARS. 

I  cannot,  in  justice  to  the  parties  interested,  too  soon  present 
it  to  the  deliberation  of  the  Legislature  and  the  people.  Both 
the  constitutionality  and  the  expediency  of  the  law  creating 
this  bank  are  well  questioned  by  a  large  portion  of  our 
fellow-citizens.  And  it  must  be  admitted  by  all,  that  it  has 
failed  in  the  great  end  of  establishing  a  uniform  and  sound 
currency.  Under  these  circumstances,  if  such  an  institution 
is  deemed  essential  to  the  fiscal  operations  of  the  Govern- 
ment, I  submit  to  the  wisdom  of  the  Legislature,  whether  a 
National  one,  founded  upon  the  credit  of  the  Govern- 
ment and  its  revenues,  might  not  be  devised  ;  which  would 
avoid  all  constitutional  difficulties,  and  at  the  same  time 
secure  all  the  advantages  to  the  Government  and  country 
that  were  expected  to  result  from  the  present  Bank." 

1832. 

Instead  of  rechartering  the  Bank  in  1829,  1830,  183 1  and 
1832,  General  Jackson  insisted  upon  the  Government  issuing 
its  own  money,  making  its  own  exchanges,  and  keeping  its 
own  deposits.  But  the  weakness  of  Congress  was  again 
apparent,  when  contending  with  the  money  power.  They 
surrendered  to  that  power,  and  rechartered  the  National 
Bank  in  1832.  Jackson  vetoed  the  bill,  and  a  two-thirds 
vote  could  not  be  obtained  to  pass  it  over  the  veto.  Here 
was  a  good  opportunity  to  carry  out  the  plans  of  Jefferson 
and  Madison,  which  had  been  defeated  by  the  banks  in 
1816. 

General  Jackson  used  all  his  great  power  to  induce  Con- 
gress to  have  the  money  of  the  nation  based  upon  the  reve- 
nues and  credit  of  the  nation  ;  but  the  bank  power  controlled 
Congress,  and  they  would  not  listen  to  his  advice  or  adopt 
his  measures  in  favor  of  a  national  currency,  issued  by  the 
nation,  expecting  to  force  him  to  sign  a  United  States  Bank 
bill.  But  Jackson  was  not  the  man  to  be  forced.  He  re- 
mained firm. 

The  Bank  had  four  years  to  operate,  after  the  veto,  before 
its  charter  expired.  The  Government  was  to  pay  off  the 
national  debt  and  have  some  $40,000,000  surplus  money  on 
hand,  which  was  in  the  Bank  of  the  United  States. 

The  Bank,  immediately  after  the  veto,  commenced  issuing 
its  own  money  and  that  of  the  Government  to  subsidize  the 
press,  to  control  the  election  of  President,  then  about  to  take 


OUR  MONEY  WARS. 


59 


place,  so  as  to  insure  a  renewal  of  its  privileges  for  twenty 
years.  To  permit  money  of  the  Government  to  be  thus  used 
would  have  been  treason  to  the  United  States.  This  was 
something  of  which  Andrew  Jackson  could  not  be  guilty. 
There  was  but  one  way  to  prevent  it,  which  was  the  removal 
of  the  deposits  from  said  Bank.  No  one  but  the  Secretary 
of  the  Treasury  could  do  this.  Mr.  Duane,  then  Secretary, 
was  ordered  to  do  it,  but  he  refused.  He  was  at  once  re- 
moved, and  Mr.  Taney  was  appointed  in  his  place.  He 
removed  the  deposits,  Oct.  i,  1833. 


When  the  U.  S.  Bank  sought  a  recharter,  Old  Hickory  was 
firm,  unyielding  and  uncompromising.  He  gathered  his 
little  Democratic  band  around  him  ;  and  when  the  second 
campaign  opened  he  sent  them  out  to  educate  and  save  the 
people — according  to  his  best  light.  He  made  no  conces- 
sions and  formed  no  coalitions  with  either  of  the  old  parties. 
Benton,  in  his  "  Thirty  Years  in  Congress,"  said  that  the 
Bank  spent  $3,000,000  in  bribing  and  subsidizing  members 
of  Congress,  newspaper  editors,  politicians,  brokers,  jobbers 
and  men  of  influence,  to  defeat  Jackson,  and  purchase  a  re- 
charter.  But  justice  and  Jackson  prevailed:  the  Bank  power 
was  destroyed. 

Jackson's  Veto  Message,  July  10,  1832. — It  is  maim 
tained  by  some  that  the  Bank  is  a  means  of  executing  the 
constitutional  power  "to  coin  money  and  regulate  the  value 
thereof."  Congress  have  established  a  mint  to  coin  money, 
and  passed  laws  to  regulate  the  value  thereof.  The  money 
so  coined,  with  its  value  so  regulated,  and  such  foreign  coins 
as  Congress  may  adopt,  are  the  only  currency  known  to  the 
Constitution.  But  if  they  have  other  power  to  regulate  the 
currency,  it  was  conferred  to  be  exercised  by  themselves, 
and  not  to  be  transferred  to  a  corporation.  If  the  Bank  be 
established  for  that  purpose,  with  a  charter  unalterable  with- 
out its  consent,  Congress  have  parted  with  their  power  for  a 
term  of  years,  during  which  the  Constitution  is  a  dead  letter. 
It  is  neither  necessary  nor  proper  to  transfer  its  legislative 
powersto  such  a  bank,  and  therefore  unconstitutional.  *  *  * 
Unauthorized  by.  the  Constitution,  subversive  of  the  rights 
of  the  States  and  dangerous  to  the  liberties  of  the  people 
*  *  *  when  the  laws  undertake  to  grant  gratuities  and  ex- 
clusive  privileges    to   make    the    rich    richer   and  the   potent 


00  OUR  MONEY  WARS. 

more  powerful,  the  humbler  members  of  society, — the  farm- 
ers, mechanics  and  laborers,  who  have-  neither  the  time 
nor  the  means  of  securing  like  favors  for  themselves, — have 
a  right  to  complain  of  the  injustice  of  the  Government. 

1833. 

Jackson's  Message,  Dec.  3,  1833. — It  being  thus  estab- 
lished by  unquestionable  proof,  that  the  Bank  of  the  United 
States  was  converted  into  a  permanent  electioneering  engine, 
it  appeared  to  me  that  the  path  of  duty,  which  the  Executive 
Department  of  the  Government  ought  to  pursue  was  not 
doubtful.  As  by  the  terms  of  the  Bank  charter,  no  officer 
but  the  Secretary  of  the  Treasury  could  remove  the  deposits, 
it  seemed  to  me  that  this  authority  ought  to  be  at  once  exert- 
ed, to  deprive  that  great  corporation  of  the  support  and  counte- 
nance of  the  Government,  in  such  a  use  of  its  funds  and  such 
an  exertion  of  its  powers.  In  this  point  of  the  case,  the 
question  is  distinctly  presented,  whether  the  people  of  the 
United  States  are  to  govern  through  representatives  chosen 
by  their  unbiased  suffrages,  or  whether  the  power  and  money 
of  a  great  corporation  are  to  be  secretly  exerted  to  influence 
their  judgment  and  control  their  decisions.  It  must  now  be 
determined  whether  the  Bank  is  to  have  its  candidates  for 
all  offices  in  the  country, — from  the  highest  to  the  lowest, — 
or  whether  candidates  on  both  sides  of  political  questions 
shall  be  brought  forward,  as  heretofore,  and  supported  by  the 
usual  means. 

The  Act  of  April  ii,  1833,  provided  that  the  Bank  of  the 
United  States  should  no  longer  act  as  the  Commissioner  of 
Loans  for  the  United  States,  the  President  having  vetoed  its 
recharter.  A  commissioner  of  loans  was  no  longer  needed ; 
as  the  United  States  did  not  wish  to  make  any  loans — the 
debt  being  nearly  paid  off. 

1834. 

The  Act  of  June  25,  1834,  makes  the  silver  dollar  of 
Mexico,  Peru,  Brazil  and  Central  America  lawful  money  of 
the  United  States.  They  remained  such  until  1857.  They 
were  not  money  in  the  United  States  until  made  such  by  law. 

The  Change  of  Ratio. — In  1834,  came  our  change  of 
ratio  between  silver  and  gold.  Judge  Warwick  Martin,  writ- 
ing in  1880,  said  : — 


OUR  MONEY  WARS.  61 

The  legal  relation  between  silver  and  gold  in  Great 
Britain,  France,  and  other  European  countries  is  to-day  1 5  j4 
pounds  of  silver  to  1  of  gold.  This  is  still  the  legal  relation 
in  England.  Notwithstanding  this  and  the  fact  that  $75,- 
000,000  of  the  reserves  of  the  Bank  of  England  are  in  silver, 
this  bank  has  [1880]  forced  the  discount  on  silver  to  15  per 
cent.,  and  makes  large  amounts  of  money  out  of  it.  England 
wishes  the  United  States  to  agree  to  this  discount  so  that 
the  bondholders  will  not  be  compelled  to  receive  silver  in 
payment  for  their  bonds,  and  that  the  Bank  may  continue  to 
make  21  per  cent,  upon  silver  purchased  by  the  Bank.  But 
what  is  the  situation  of  the  United  States  in  connection  with 
this  matter?  From  1792  until  1834,  the  relation  created  by 
law  between  silver  and  gold  in  the  United  States  was  1 
pound  of  gold  to  15  pounds  of  silver.  The  English  took 
advantage  of  this  and  purchased  all  our  gold,  paying  15 
pounds  of  silver  for  1  pound  of  gold  ;  and  thus  making  one- 
half  pound  of  silver  by  every  pound  of  gold  thus  purchased 
from  us.  We  then  made  our  coin  n-i2fme.  Our  bonds 
were,  up  to  1834,  yet  unpaid,  and  they  were  payable  in  coin 
at  this  standard  fineness.  The  fineness  could  not  therefore 
be  changed  by  law  at  that  time.  Our  honesty  and  regard 
for  the  national  credit  compelled  us  to  permit  England  to 
depredate  upon  us  until  our  debt  was  paid. 

In  June,  1834,  every  dollar  of  the  money  owing  by  the 
United  States  was  placed  in  bank,  in  the  money  for  which 
the  bonds  called,  to  pay  them  on  presentation.  We  were 
then  out  of  debt.  The  time  had  come  when  we  could,  in 
justice  to  all,  change  the  relation  between  silver  and  gold 
and  the  standard  fineness  of  both. 

On  the  28th  of  June,  1834,  the  act  was  passed  changing 
the  relation  of  silver  and  gold  and  making  the  legal  relation 
16  pounds  of  silver  to  1  of  gold,  and  the  standard  fineness 
9-10  instead  of  11- 12,  as  it  had  been.  This  was  the  only 
time  in  our  history  when  we  could  have  made  these  changes, 
owing  to  previous  debts.  It  is  to  be  greatly  regretted 
that  15J2  to  1  had  not  been  adopted  instead  of  16  to  1.  But 
the  English  did  not  neglect  the  opportunity  which  this  law 
gave  to  depredate  upon  us.  They  had,  under  our  old  law, 
taken  away  nearly  all  our  gold  and  given  us  nearly  all  their 
silver.  They  were  able,  after  the  law  of  1834,  to  purchase 
nearly  all  our  silver,  and  to  pay  for  it   in  gold,  1  pound  of 


62  OUR  MONEY  WARS. 

gold  for  1 6  pounds  of  silver — thus  making  one-half  pound  of 

silver    upon    every    pound    of    gold    they    sold    us 

It  will  be  seen,  therefore,  that  unless  nations  can  agree 
upon  the  same  unit  of  value  and  of  the  money  of  account, 
and  upon  the  legal  relation  which  gold  and  silver  shall  sus- 
tain to  each  other,  and  also  upon  a  common  standard  of 
fineness,  they  never  can  have  international  metallic  money. 
Upon  these  three  things  they  never  can  agree.  An  agree- 
ment among  nations  to  adopt  such  a  coinage,  would  make 
it  necessary  to  recoin  and  change  all  the  coins  of  the  world. 
This  will  never  be  done. 

But  there  is  no  necessity  for  anything  of  the  kind.  As 
nations  do  not  pay  debts  to  each  other  in  money,  but  in 
commodities,  it  matters  not  to  one  nation  what  the  money  of 
another  nation  is.  As  we  have  no  money  of  the  world,  and 
can  have  no  international  money,  we  beg  our  statesmen  to 
permit  us  to  attend  to  our  business  instead  of  to  the  business 
of  other  nations.  We  want  money  for  the  United  States, 
not  for  other  nations.  Let  our  money  be  made  by  Congress 
of  that  which  costs  us  least,  and  will  best  answer  the  business 
demands  of  the  country. 

[It  is  about  time  that  honest  rustic,  Uncle  Sam,  stopped 
allowing  England — the  bunco-steerer  of  the  world— to  play 
him  for  a  flat. — L.  S.] 

Here  is  a  technical  description  of  the  law  of  June  28, 
1834  ;  showing  its  effect  on  the  relations  of  gold  and  silver: 
The  United  States  were  out  of  debt.  They  had  in  bank  the 
money  to  pay  off  every  obligation.  They  could,  therefore, 
without  being  charged  with  bad  faith,  change  the  standard 
fineness  of  their  coins ;  which  they  then  did.  This  act 
changed  the  relation  between  silver  and  gold  from  15  to  1  to 
16  to  1,  and  the  standard  fineness  of  gold  from  11-12  to  9-10. 
This  made  25.8  grains  gold,  9-10  fine,  correspond  with  the 
silver  dollar  of  371*^  grains  pure  silver,  instead  of  27  grains 
11-12  fine,  as  under  the  law  of  1792.  The  gold  dollar 
did  not  exist  under  either  of  these  laws  ;  but  27  grains  gold, 
under  the  former  law,  and  25.8  grains,  under  the  latter,  were 
made  the  value  of  a  dollar.  The  so-called  gold  dollar  of 
1792  contained  24.75  grains  pure  gold,  and  under  the  acts  of 
1834  and  1837,  23.22  grains  pure  gold,  a  difference  of  1.53 
grains  in  the  dollar.     The  law  of  1792  made  a  pound  of  gold 


OUR  MONEY  WARS.  63 

worth  15  pounds  of  silver.  The  law  of  1834  makes  a  pound 
of  gold  worth  16  pounds  of  silver.  There  is  xy%  per  cent. 
difference  in  the  metallic  values  of  gold  coins,  of  the  same 
denomination,  under  these  two  laws.  Their  legal  or  money 
value  is  the  same  under  both  laws — being  $2.50,  $5.00, 
$10.00,  and  no  more.  Law  makes  and  unmakes  money. 
The  gold  eagle,  under  the  law  of  1792,  contained  15^2 
grains  more  pure  gold  than  the  eagle  under  the  laws  of  1834 
and  1837.  

The  second  Act  of  June  28,  1834,  changed  the  valuation 
of  foreign  gold  coins  in  the  United  States  to  make  them  cor- 
respond with  the  law  of  June  28,  1834,  changing  the 
standard  fineness  of  gold  in  the  United  States.  This  shows 
how  completely  metallic  money,  as  well  as  other  money,  is 
made  and  controlled  by  law.  Law  makes  and  unmakes 
money.  Why  were  so  many  coin  laws  passed  by  Congress 
in  one  month?  There  is  a  history  in  this  worthy  of  being 
known.  

Profound  lessons  have  been  drawn,  by  some  real  econo- 
mists, from  the  effect  of  the  change  of  ratio  in  1834,  upon 
the  financial  relations  of  England  and  the  United  States. 

Henry  C.  Carey  wrote  in  1875  : — Of  all  American  writers 
whose  attention  was  then  given*  to  monetary  questions,  there 
was,  I  think,  none  whose  opinions  in  relation  thereto,  were 
held  in  more  respect  than  were  those  of  my  friend,  Mr. 
Condy  Raguet,  from  whose  work,  published  in  1839,  I 
take  the  following  passage  :  "  Prior  to  the  passage  of  the 
gold  bill  above  referred  to,  the  metallic  currency  of  the 
United  States  had  been  virtually,  as  above  stated,  a  currency 
of  silver,  since  the  establishment  of  the  Government — gold 
very  rarely  appearing — while  that  of  Great  Britain  was  of 
gold.  The  consequence  was,  that  the  currency  of  each  was 
independent  of  the  other  ;  and  the  contraction  or  expansion  of 
each  did  not  necessarily  act  upon  the  other.  The  contrac- 
tion in  England,  which  preceded  the  resumption  of  specie 
payments,  in  182 1,  after  a  long  suspension  of  24  years,  pro- 
duced no  convulsion  on  this  side  of  the  Atlantic.  Nor  did 
our  contraction,  distressing  and  durable  as  it  was,  after  the  re- 
moval of  the  public  deposits  from  the  Bank  of  the  United 
States,  on  October  1,  1833 — which  brought  down  the  prices  of 


64  OUR  MONEY  WARS. 

stock  from  20  to  50  per  cent.,  and  led  to  the  importation  of 
$3,793,293  in  silver  from  England  alone,  during  the  year 
ending  September  30,  1834, — produce  any  convulsion  in  that 
country.  Such  would  have  continued  to  be  the  case,  had 
the  mint  regulations  remained  without  alteration.  But  no 
sooner  was  gold,  by  a  change  in  its  relative  value  to  silver, 
rendered  the  most  profitable  of  the  two  metals  to  import, 
than  we  found  the  currency  of  England  disturbed  to  a  degree 
that  rendered  necessary  an  immediate  reduction  of  her  paper- 
issue  ;  although  the  amount  of  gold  drawn  from  her  between 
the  passage  of  the  law,  in  June,  1835,  anc^  September  30  of 
the  same  year,  was  but  $1,922,960.  To  our  importation  of 
gold  in  the  years  1S35  and  1836,  instead  of  silver,  may  be 
ascribed  that  further  contraction  of  the  British  currency, 
which  led  to  the  crisis  of  the  latter  year  that  was  so  fatal  to 
American  credits  and  American  cotton  ;  by  which  millions 
of  dollars  were  lost  to  the  country. 

"  Now  as  like  causes  will  produce  like  effects,  it  behooves 
us  to  examine  well  into  this  matter;  and  if  we  find  that  we 
have  committed  an  error,  it  is  our  duty  to  retrace  our  steps. 
Thus  far  very  little  progress  has  been  made  toward  introduc- 
ing gold  into  actual  circulation  :  notwithstanding  that  a  large 
amount  has  been  imported.  Still,  a  long  perseverance  in 
the  law  will  give  us  a  gold  currency :  but  it  will  be  mcst 
dearly  purchased.  It  will  so  closely  ally  our  fortunes  with 
those  of  Great  Britain,  that  no  convulsion  can  take  place  in 
the  currency  of  that  country  that  will  not  act  directly  and 
powerfully  upon  ours  ;  while,  on  the  other  hand,  none  can 
take  place  on  our  side  that  will  not  act  directly  upon  hers  ;  and 
in  so  doing  break  down  the  prices  of  cotton  and  tobacco, 
and  other  American  products,  in  the  market  of  Europe,  to 
the  great  injury  of  our  planting  interest." 


1835. 

Banking  in  the  Northwest. — The  following  shows  how 
things  were  working  at  this  time  in  the  great  Northwest. 
Mr.  John  Johnston,  Alexander  Mitchell's  son-in-law,  said  at 
the  Bankers'  Convention  in  Saratoga,  in  1880  : 

"The  first  bank  in  what  is  now  Wisconsin  was  chartered  in 
1835,  by  the  Legislature  of  the  Territory  of  Michigan.     In 


OUR  MONEY  WARS.  65 

1836,  three  other  banks  were  started,  with  a  possible  circula- 
tion of  $1,800,000,  by  a  legislature  representing  20,000  people, 
scattered  over  266,000  square  miles.  This  area  has  now 
600  banks.  The  panic  of  1837  greatly  discredited  the  circu- 
lation of  the  existing  banks.  In  1838,  Wisconsin  was  re- 
duced to  its  present  limits  of  54,000  square  miles.  From 
1836  to  1840,  its  population  had  increased  250  per  cent., 
largely  in  consequence  of  the  crisis  of  1837.  In  1839, 
George  Smith  and  Alexander  Mitchell  came  from  Aberdeen, 
Scotland,  to  the  western  shores  of  Lake  Michigan,  as  pro- 
moters of  the  Scottish  Land  Improvement  Co.,  but  they  fell 
into  the  practice  of  banking.  Their  Wisconsin  Marine  and 
"^Fire  Insurance  Co.  issued  certificates  of  deposit  as  small  as 
one  dollar,  and  in  volume  up  to  $1,000,000.  Wisconsin  having 
been  cleared  of  paper  currency  by  the  recent  financial  hurri- 
cane, these  certificates  of  deposit  had  a  great  mission  to  per- 
form. The  company  encountered  both  adverse  legislation 
and  repeated  runs.  These  runs  were  organized  by  the  bankers 
and  brokers  of  the  other  States.  In  1844,  the  Legislature 
repealed  the  company's  charter.  The  spirited  young  Scotch- 
men issued  a  declaration  that  this  action  could  not  affect 
their  rights,  and  that  their  notes  would  continue  to  be  re- 
deemed in  Milwaukee,  Chicago,  Galena,  St.  Louis,  Detroit 
and  Cincinnati.  This  strengthened  them  in  the  eyes  of  the 
public.  The  Peninsular  Bank  of  Michigan  often  sent  by 
steamboat  large  amounts  of  the  company's  circulation  for 
redemption.  The  coin  was  always  ready.  The  worst  run  of 
all  was  organized  by  Chicago  brokers  in  1849.  Mr.  Mitchell 
sent  for  coin  to  meet  the  raid,  both  by  lake  and  land.  The 
wagon  broke  down  on  the  way,  but  the  run  was  met.  Its 
depositors  never  ran  the  company.  Farmers,  hearing  that 
Mr.  Mitchell  was  being  run,  would  leave  their  crops  to  bring 
him  what  coin  they  had  on  hand." 

All  this  is  natural  enough.  Though  it  is  quite  deplorable, 
we  can't  blame  Mitchell,  if  this  fool  people  made  him  the 
King  of  the  Northwest, — its  richest  millionaire, — by  neglect- 
ing to  provide  a  suitable  amount  of  Government  paper 
money. 

Speculations  in  England  in    1834,    1835  AND    I^3^>- — " 
When  the  800  State  banks  professing  to  pay  coin  for  all  lia- 
bilities were,  in    1833,  1S34,    1835    and    1836,  supplying  the 
people  of  the  United  States  with  money  to  engage  in  all 
5 


66  OUR  MONEY  WARS. 

kinds  of  speculations,  the  banks  of  Great  Britain,  including 
the  Bank  of  England,  also  professing  to  pay  coin,  were  doing 
the  same  thing  for  the  people  of  England  ;  and  in  the  mone- 
tary crisis  which  followed,  the  Bank  of  England  would  have 
suspended  but  for  aid  received  by  her  from  the  Bank  of 
France  [as  usual].  These  speculations  were  not  caused  or 
sustained  by  Government  paper,  or  irredeemable  money  of 
any  kind.  Banks  professing  to  pay  coin  were  their  sup- 
porters. 


OUR  MONEY  WARS  67 


CHAPTER  IX. 

1836  to  1846. 
1836. 

The  Banks  in  Luck  Again. — The  Act  of  June  23,  1836, 
provides  that  the  deposits  of  the  United  States  should  be 
made  in  State  banks,  and  that  said  banks  should  do  and 
perform  for  the  Treasury  all  that  the  United  States  banks 
had  done  and  performed.  These  banks  obligated  themselves 
to  at  all  times  pay  coin,  and  to  pay  the  Government  two  per 
cent,  interest  for  certain  deposits.  They  were  to  report 
their  condition  to  the  Secretary  of  the  Treasury  at  certain 
periods.  Thus  it  seems  that, — strange  as  it  may  appear, — 
Congress  had  not  learned  wisdom,  by  their  experience  with 
State  banks  in  1812,  '13,  '14  and  '15.  The  two  per  cent,  bait 
was  a  big  inducement.  But  in  less  than  one  year  after  the 
act  was  passed,  these  banks  all  suspended,  with  a  large 
amount  of  Government  money  on  deposit — forty  million  dol- 
lars. The  Treasury  being  without  funds,  Treasury  notes 
were  again  resorted  to  ;  and  by  them  the  business  of  the 
country  and  the  Mexican  war  were  sustained.  The  Govern- 
ment again  came  out  a  large  loser  by  deposits  in  State  banks. 
This  led  to  the  divorcing  of  the  Government  from  all  banks  ; 
and  excluding  all  bank  notes  from  the  Treasury,  by  the  law 
of  1846. 

Wisdom  of  Sarsaparilla  Townsend. — Notable  echoes 
from  this  Jackson  epoch  are  found  in  the  pamphlets  issued, 
from  1862  to  1864,  by  that  wise  and  earnest  patriot,  S.  P. 
Townsend,  of  sarsaparilla  fame  and  fortune.  He  brings  in 
an  element  not  elsewhere  considered,  "  The  Albany  Regency." 
For  instance,  here  : — 

In  the' days  of  the  old  United  States  Bank,  the  Democracy 
broke  the  Bank  and  bankrupted  the  country,  and  succeeded 
in  ruining  the  Whig  party  :  because  they  made  it  appear  that 
it  was  the  Bank  that  destroyed  the  people  [partly  true,  S. 
L.] :  when  the  fact  was  the  disaster  was  caused  by  destroy- 
ing the  institution.  It  is  due  to  the  great  Jackson  to  say  that 
he  never  contemplated  cessation  of  a  national  banking  insti- 


68  OUR  MONEY  WARS. 

tution  :  for  he  said  in  his  veto  message,  '•  Had  the  Executive 
been  called  upon  to  furnish  the  plan  for  a  bank,  the  duty 
would  have  been  cheerfully  performed."  It  was  the  corrupt 
Albany  Regency,  and  their  pet  Safety-fund  banking  system, 
headed  by  Martin  Van  Buren,  and  the  Albany  Argus,  that 
destroyed  and  brought  into  contempt  and  banished  the 
national  constitutional  money;  and  filled  the  land  with  worth- 
less shin-plasters.  These,  having  no  foundation,  soon  van- 
ished ;  or  kept  shifting  and  drifting  like  the  sands  of  the 
desert,  until,  under  Buchanan's  administration,  the  people 
became  so  impoverished  that  it  was  with  difficulty  the  Gov- 
ernment could  negotiate  a  loan  of  a  few  millions  at  twelve 
per  cent,  per  annum.  This  same  party,  led  on  by  the  same 
Albany  Argus,  are  pursuing  exactly  the  same  course  in  re- 
gard to  the  legal  tender  Treasury  notes.  They  have — in 
tens  of  thousands  of  speeches  and  editorials — predicted  that 
the  use  of  these  notes  would  ruin  the  country  ;  and  clam- 
ored that  they  may  be  withdrawn  ,  which,  if  done,  will  as 
assuredly  destroy  business  and  credit,  and  bankrupt  the 
country,  as  did  the  destruction  of  the  old  United  States  Bank. 
But  what  would  be  most  unfortunate  of  all,  these  unprincipled 
politicians  would  come  into  power  again  ;  raised  from  the  ruin 
they  had  caused,  aided  by  the  weakness  of  Unionists,  who 
are  actually  alarmed  at  prosperity  1 


1837. 

According  to  an  Act  of  1836,  the  surplus  in  the  United 
States  Treasury  was  to  be  distributed  among  the  States, 
in   proportion  to  their  population,  beginning  Jan.   1,  1837. 

The  Act  of  January  18,  1837,  changed  the  alloy  in  silver 
coins  from  103^  to  100  parts  in  the  1000  parts  ;  making  both 
gold  and  silver  coins,  in  the  United  States,  9-10  fine;  and 
reducing  the  alloy  in  the  silver  dollar  $%  grains  ;  but  leav- 
ing the  silver  therein  371^  grains,  the  same  as  in  the  law 
of  1792.  The  dollar,  under  the  law  of  1837,  is  41 2^4  grains, 
instead  of  416  grains,  as  under  the  law  of  1792.  Be  it  remem- 
bered that  the  Constitution  says  nothing  about  alloying  gold 
and  silver  coins.  Did  Congress  violate  the  constitution  b) 
so  doing  ?     We  think  not. 

Panic  of  1837. — March  4,  1837,  Martin  Van  Buren  be- 
came President. 


OUR  MONEY  WARS.  69 

May  10,  1837,  all  the  New  York  banks  suspended.  Sum- 
ner, of  Yale,  thus  describes  this  matter  : 

In  March,  a  meeting  was  held  in  New  York,  which  was 
addressed  by  Mr.  Webster.  He  ascribed  the  distress  to  the 
interference  of  the  Government  with  the  currency,  and  to  the 
"  Specie  Circular  "  [demanding  that  public  lands  be  paid  for 
in  specie  only].  A  committee  of  fifty  was  sent  to  Washing- 
ton, to  ask  for  the  rescinding  of  the  circular.  In  the  address 
to  the  President  (Van  Buren),  they  said  :  "  The  value  of  our 
real  estate  has,  within  the  last  six  months,  depreciated  more 
than  forty  millions.''  "  Within  the  last  two  months  there  have 
been  more  than  250  failures.'5  "  A  decline  of  $20,000,000  has 
occurred  in  our  local  stocks."  "  The  immense  amount  of 
merchandise  in  our  warehouses,  has,  within  the  same  period, 
fallen  in  value  at  least  thirty  per  cent."  "  Within  a  few  weeks, 
not  less  than  20,000  individuals  depending  on  their  daily  labor 
for  their  daily  bread  have  been  discharged  by  their  em- 
ployers; because  the  means  of  retaining  them  were  ex- 
hausted." They  ascribe  all  this,  as  they  say,  not  to  an 
undue  extension  of  mercantile  enterprise,  but  to  the  attempt 
to  substitute  a  metallic  for  a  paper  currency,  the  removal  of 
the  deposits  and  the  specie  circular. 

The  President  did  nothing. 

The  banks  all  suspended  May  10. 

Nearly  all  the  banks  made  money  out  of  the  suspension,  and 
paid  large  dividends  during  the  year. — History  of  Am.  Cur- 
rency: _W.  G.  Sumner. 

This  last  item  is  very  significant — coming  from  such  a  gold 
idolater ! 

Tom  Benton  on  Currency. — There  were  lively  discus- 
sions in  Congress  on  currency  in  1837.  Thomas  Benton 
said,  in  the  Senate  :  "  The  Government  ought  not  to  delegate 
this  power  if  it  could,  It  was  too  great  a  power  to  be  trusted 
to  any  banking  company  whatever,  or  to  any  authority  but 
the  highest  and  most  responsible  which  was  known  to  our 
form  of  government.  The  Government  itself  ceases  to  be 
independent, — it  ceases  to  be  safe, — when  the  national  cur- 
rency is'  at  the  will  of  a  company.  The  Government  can 
undertake  no  great  enterprise — either  of  war  or  peace — 
without  the  consent  or  co-operation  of  that  company.  It  can- 
not count  its  revenues  for  six  months  ahead,  without  refer- 
ring to  the  action  of  that  company, — its  friendship  or  its  en- 


7<D  OUR  MONEY  WARS. 

mity,  its  concurrence  or  opposition, — to  see  how  far  that  com- 
pany will  permit  money  to  be  scarce  or  plentiful ;  how  far  it 
will  let  the  money  system  go  on  regularly,  or  throw  it  into 
disorder  ;  how  far  it  will  suit  the  interests  or  policy  of  that 
company  to  create  a  tempest  or  suffer  a  calm  in  the  moneyed 
ocean. 

"  The  people  are  not  safe  when  such  a  company  has  such  a 
power.  The  temptations  are  too  great,  the  opportunity  too 
easy,  to  put  up  and  down  prices  ;  to  make  and  break  fortunes ; 
to  bring  the  whole  community  on  its  knees  to  the  Neptunes 
who  preside  over  the  flux  and  reflux  of  paper.  All  property 
is  at  their  mercy.  The  price  of  real  estate,  of  every  growing 
crop,  of  every  staple  article  in  the  market,  is  at  their  com- 
mand. Stocks  are  their  plaything — their  gambling  theatre — 
on  which  they  gamble  daily,  with  as  little  secrecy  and  as  lit- 
tle morality,  and  far  more  mischief  to  fortunes,  than  common 
gamblers  carry  on  their  operations." 

Speaking  of  the  acts  of  the  Bank  charter,  by  Jackson,  and 
of  De  Toqueville's  mistake  about  it,  Benton  says  : — De 
Toqueville  speaks  of  the  well-informed  classes  who  rallied 
around  the  Bank  ;  and  the  common  people,  who  had  formed 
no  rational  opinion  about  it,  and  who  had  joined  General  Jack- 
son. Certainly  the  great  business  community,  with  few  ex- 
ceptions,— comprising  wealth,  ability  and  education, — went 
for  the  Bank,  and  the  masses  for  General  Jackson.  But  which 
had  formed  the  rational  opinion  is  seen  by  the  event.  The 
"  well-informed  "  classes  have  bowed  not  merely  to  the  de- 
cision but  to  the  intelligence  of  the  masses.  They  have 
adopted  their  opinion  of  the  institution — condemned  it — 
repudiated  it  as  an  "  obsolete  idea  "  ;  and  of  all  of  its  former 
advocates  not  one  now  exists.  All  have  yielded  to  that  in- 
stinctive sagacity  of  the  people,  which  is  an  overmatch  for 
book-learning  ;  and  which,  being  the  result  of  common-sense, 
is  usually  right ;  and  being  disinterested,  is  usually  honest. 

Calhoun  on  Currency. — John  C.  Calhoun,  in  his  speech 
in  the  Senate,  in  1837,  when  the  banks  were  suspending, — 
with  the  public  money  in  their  vaults,- — made  the  following 
remarks  : — It  is,  then,  my  impression  that,  in  the  present  con- 
dition of  the  world,  a  paper  currency  in  some  form  *  *  * 
is  almost  indispensable  in  financial  and  commercial  opera- 
tions of  civilized  and  extensive  communities.  In  many  re- 
spects it  has  a  vast  superiority  over  a  metallic  currency ;  es- 


OUR  MONEY  WARS. 


71 


pecially  in  great  and  extended  transactions, — by  its  greater 
cheapness,  lightness,  and  the  facility  of  determining  the 
amount.  It  may  throw  some  light  on  this  subject  to  state 
that  North  Carolina,  just  after  the  Revolution,  issued  a  large 
amount  of  paper,  which  was  made  receivable  in  dues  to  her. 
It  was  also  made  a  legal  tender;  but  which,  of  course,  was 
not  made  obligatory  after  the  adoption  of  the  Federal  Con- 
stitution. A  large  amount — say  between  $400,000  and  $500,- 
000 — remained  in  circulation  after  that  period,  and  continued 
to  circulate  for  more  than  20  years,  at  par  with  gold  and  sil- 
ver during  the  whole  time,  with  no  other  advantage  than  be- 
ing received  in  the  revenue  of  the  State,  which  was  much 
less  than  $100,000  per  annum. 

No  one  can  doubt  fesrtrthat  the  Government  credit  is  bet- 
ter, than  that  of  any  bank;  more  reliable  ;  more  safe.  Why, 
then,  should  it  mix  up  with  the  less  perfect  credit  of  those 
institutions  ?  Why  not  use  its  own  credit  to  the  amount  of 
its  own  transactions  ?  Why  should  it  not  be  safe  in  its  own 
hands,  while  it  shall  be  considered  safe  in  the  hands  of  800 
private  institutions,  scattered  all  over  the  country,  and 
which  have  no  other  object  but  their  own  private  profit ;  to 
increase  which,  they  extend  their  business  to  the  most 
dangerous  extremes  ?  And  why  should  the  community  be 
compelled  to  give  six  per  cent,  discount  for  the  Government 
credit,  blended  with  that  of  the  bank,  when  the  superior 
credit  of  the  Government  could  be  furnished  separately 
without  discount,  to  the  mutual  advantage  of  the  Govern- 
ment and  the  community  ? 

But  whatever  may  be  the  amount  that  can  be  circulated, 
I  hold  it  clear,  that  to  that  amount  it  would  be  as  stable  in 
value  as  gold  and  silver  itself,  provided  the  Government  be 
bound  to  receive  it  exclusively  with  those  metals  in  all  its 
dues,  and  that  it  be  left  perfectly  optional  with  those  who 
have  claims  on  the  Government,  to  receive  it  or  not. 

Again  he  said  :  We  are  told  the  form  I  suggested  is  but  a 
repetition  of  the  "  old  Continental  Money,"  a  ghost  that  is 
ever  conjured  up  by  all  who  wish  to  give  the  banks  an  ex- 
clusive monopoly  of  Government  credit.  There  is  not  the 
least  analogy  between  them.  The  one  is  a  promise  to  pay 
when  there  is  no  revenue  ;  and  the  other  a  promise  to  re- 
ceive, in  the  dues  of  the  Government,  when  there  is  abun- 
dant revenue. 


72  OUR  MONEY  WARS. 

One  Mill  per  Annum. — Judge  Warwick  Martin  says  of 
the  Act  of  October  12,  1837  : — The  banks  had  all  suspended, 
with  nearly  $40,000,000  Government  funds.  Not  one  year 
before,  the  law  had  made  these  banks  public  depositories, 
with  their  promise  that  they  would  always  pay  coin  for  all 
liabilities.  The  Government  had,  in  1835,  paid  off  the  last 
dollar  of  the  national  debt.  The  surplus  then  in  the  Treas- 
ury was  near  $40,000,000.  This  was  in  the  banks.  The 
Government  had  no  money  to  pay  ordinary  expenses,  unless 
the  Treasury  used  suspended  bank  notes.  This  Mr.  Van 
Buren,  then  President,  refused  to  do.  He  called  Congress 
together  to  meet  the  emergency.  Their  remedy  for  the 
emergency  was  to  issue  Treasury  notes,  which  Jefferson  says 
are  the  only  reliance  of  a  nation.  This  Act  of  October  12, 
1837,  provided  for  the  issue  of  $10,000,000  Treasury  notes, 
in  denominations  not  less  than  $50,  running  one  year.  The 
law  left  the  interest  which  they  were  to  bear  discretional 
with  the  President  and  the  Secretary  of  the  Treasury  ;  but  in 
no  case  was  it  to  exceed  six  per  cent.  Congress  appeared 
too  timid  to  make  these  notes  money,  bearing  no  interest. 
They  did  not  authorize  the  Secretary  to  so  make  them. 
They  did,  however,  leave  the  rate  of  interest  which  the  notes 
were  to  bear  discretionary  with  him.  He,  knowing  that  the 
people  needed  them  as  money,  complied  with  the  law,  by  caus- 
ing many  of  these  notes  to  bear  one  mill  interest  per  annum. 
As  such,  they  circulated  freely  as  money,  and  the  people 
were  delighted  to  get  and  use  them.  They  answered  all  the 
purposes  of  coin,  and  equalized  the  exchanges  throughout 
the  country.  The  banks  did  not  at  that  time  possess  suffi- 
cient power  to  injure  them.  The  writer  was  then  in  the  mer- 
cantile business  in  Pittsburg,  Pa.,  and  he  often  saw  and  re- 
ceived them  in  business.  They  were  made  legal  tender  for 
all  debts  due  the  United  States  ;  and  were  payable  to  credi- 
tors of  the  Government,  as  all  the  other  Treasury  notes  had 
been.  They,  like  the  notes  of  the  Bank  of  England,  were, 
under  this  law,  never  to  be  paid  out  of  the  Treasury  but 
once.     Upon  returning  they  were  all  canceled. 

The  Act  of  October  16,  1837 — (Statutes  5,  p.  206)  author- 
ized the  Secretary  of  the  Treasury  to  settle  with  the  deposit 
banks  upon  the  best  terms  he  could — said  banks  having  all 
suspended,  owing  the  Government  some  $40,000,000,  which 
they  could  not  pay,  excepting  in  their  suspended  bank  paper. 


OUR  MONEY  WARS. 


73 


A  Thinker  cries  "  Eureka  !  " — 1837  brought  out  a  great 
thinker  and  writer  on  finance,  from  among  the  New  York 
merchants, — Edward  Kellogg. 

Edward  Kellogg  was  a  prosperous  merchant ;  but  the 
panic  of  1837  dragged  him  into  the  whirlpool  of  financial 
ruin  ;  he  had  become  bankrupt,  through  no  fault  of  his.  He 
studied  the  question  of  panics,  in  all  its  bearings,  and  lay 
awake  many  a  night  pondering  over  the  causes  of  hard 
times.  And  one  night,  in  1843,  after  lying  awake,  as  he  had 
often  done  before,  he  jumped  up,  exclaiming,  in  the  very 
words  of  the  old  Greek  philosopher,  "Eureka"!  and  sat 
down  to  write  out  the  points  of  his  discovery.  He  had 
"  found  it  ".  The  whole  trouble  lay  in  the  fallacy  that  placed 
money,  the  life-blood  of  the  world's  industries,  under  the 
control  of  the  few,  and  made  it  a  monopoly.  As  a  matter  of 
course,  the  first  pamphlet  he  wrote  was  incomplete.  But  he 
wrote  more,  and  rewrote  the  first  one.  His  gifted  daughter, 
Mary,  was  his  valuable  and  trusted  assistant ;  and  soon,  as  a 
result  of  their  joint  labors,  we  had  his  book,  "A  New  Mone- 
tary System,"  which  has  been  a  text-book  and  guide  for 
labor  and  currency  reformers  ever  since. 

1838. 

The  Act  of  May  21,  1838. — This  act  authorized  the  re- 
issue of  the  $10,000,000  Treasury  notes  issued  under  the 
Act  of  1837,  which  that  act  provided  should  be  canceled  on 
their  return  to  the  Treasury.  It  was  unwise  in  Congress  not 
to  provide  that  these  Treasury  notes,  which  bore  no  interest, 
should  remain  uncanceled  until  w'orn  out ;  when  new  notes 
should  have  been  given  for  them.  It  has  taken  time  and  a 
great  war  to  open  the  eyes  of  the  people,  and  Congress,  to 
see  what  Jefferson  saw  in  1813. 

Albert  Gallatin,  when  president  of  the  Bank  of  North 
America,  of  New  York  City,  in  1838,  said  at  a  bank  conven- 
tion :  "  We  all  know  that  while  a  bank  note  bears  upon  its 
face  a  promise  to  pay  the  amount  of  its  denomination  in 
coin,  it  carries  with  it  the  implied  condition  that  it  be  not" 
asked  for.". 

Many  years  later,  that  great  philosopher,  Henry  C.  Carey, 
quoted  this,  and  said  : — In  other  words,  he  might  have  said, 
Whenever  British  banks  and  bankers  are  inflating  the  cur- 
rency,   British  manufacturers  flood  our  markets  with  goods 


74  OUR  MONEY  WARS. 

to  be  sold  at  long  credits.  Money  and  credit  then  abound 
among  ourselves.  Specie  not  being  needed,  our  banks  follow 
suit,  largely  extending  their  loans,  and  thus  inducing  their 
customers  to  enlarge  their  business,  to  build  ships  and 
houses,  and  to  make  new  roads.  A  year  or  two  passes,  and 
we  enjoy  what  is  called  prosperity.  Then,  however,  comes 
from  across  the  Atlantic  a  chilling  frost,  in  the  form  of 
refusal  of  new  credits,  and  withdrawal  of  old  ones,  and  in 
all  other  of  the  usual  accompaniments  of  a  crisis.  The  little 
specie  we  then  have  on  hand  is  drawn  out, — the  gold  for 
Britain,  and  the  silver  for  France  or  Germany, — compelling 
us  to  insist  upon  payment  by  our  customers  ;  most  of  whom, 
unable  to  pay,  become  bankrupt.  We,  ourselves,  then,  after 
fruitless  efforts,  resort  to  suspension,  in  the  hope  and  belief 
that  State  legislators  may  manifest  their  pity  for  us,  by 
legalizing,  for  a  year  or  two,  the  violation  of  the  laws  to 
which  we  have  been  driven.  Such  is  the  true  financial  his- 
tory of  the  country,  throughout  seventy  years  that  we  were 
making  believe  to  use  machinery  of  exchange  like  that  in 
use  in  France,  England,  and  other  manufacturing  countries 
of  Europe.  At  intervals  of  half-a-dozen  years,  our  mone- 
tary bag  has  been  inflated  from  abroad  ;  the  balloon  then 
rising,  to  be  suddenly  collapsed  at  the  will  of  foreign  bank- 
ers,— with  ruin  to  all  who  have  been  led  to  go  in  debt ;  leaving 
them,  and  their  families,  to  start  in  the  world  anew  ;  with  the 
stain  of  bankruptcy  clinging  to  them  in  all  the  future. 

In  1838,  Henry  C.  Carey  printed  his  great  book,  "The 
Credit  System  in  France,  Great  Britain  and  the  United 
States."  He  announced  the  then  novel  doctrine  that,  among 
the  many  vices  of  the  credit  and  banking  systems  of  England 
and  America, — which  always  have  been  so  closely  related, 
as  to  be  almost,  if  not  absolutely  identical, — the  most  de- 
structive was  that  which  permitted  banks  to  lend,  without 
restriction,  money  or  credits  deposited  with  them  for  safe- 
keeping. He  was,  thus,  the  first  to  thoroughly  expose  the 
sham  and  evil  hidden  under  "  bank  deposits  and  loans,"  which 
are  largely  the  mere  moonshine  of  inflated  bank  credits — 
alias  debts. 

1839. 

One  financial  event  of  this  year  was  the  book  on  Money 
printed  by  Condy  Raguet,  much  quoted  by  H.  C.  Carey  and 
others. 


OUR  MONEY  WARS.  75 

The  Phila.  Bank  of  the  United  States  (Nick  Biddle's) 
stopped  October  10,  1839,  followed  by  nearly  all  the  banks  of 
the  South  and  West.  It  finally  closed  February  4,1841.  The 
great  deserted  palace  of  a  bank  building  stood  there  on 
Third  Street  in  i860,  and  later — a  monumental  warning 
against  too  much  "private  enterprise." 

1840. 

The  Act  of  May  31,  1840  (Statutes  5,  p.  370). — This 
law  renews  the  Act  of  i837,*relating  to  the  issue  of  Treasury 
notes,  and  makes  the  following  modifications  :  1.  That  they 
were  to  be  issued  in  place  of  those  redeemed  ;  not  to  exceed 
in  this  issue  $5,000,000.  2.  They  were  to  be  redeemed  in 
less  than  a  year,  if  the  Treasury  was  in  a  condition  to  redeem 
them.  3.  When  ready  to  redeem  them,  the  Secretary  of  the 
Treasury  was  to  give  notice.  4.  After  due  notice,  the  notes 
should  cease  to  bear  interest,  if  they  remained  out.  This 
act  was  to  continue  only  one  year.  It  is  evident  that  Con- 
gress supposed  the  necessity  for  issuing  Treasury  notes 
would  soon  cease,  but  they  were  mistaken. 

The  Act  of  July  4,  1840,  was  the  first  independent  Treas- 
ury act  of  the  days  of  Mr.  Van  Buren.  The  money  of  the 
Government  was  to  be  kept  by  the  Government,  instead  of 
the  banks,  in  mints,  custom-houses,  post-offices  and  the 
Treasury  building.  The  main  feature  of  the  bill  was  that 
after  January  3,  1843,  no  payment  should  be  madeto  the  Gov- 
ernment in  anything  but  gold  and  silYer  coin.  The  banks  were 
then  suspended.  The  Government  was  being  sustained  by 
Treasury  notes.  But  still  this  law  provided  that  after  January, 
1843,  Treasury  notes  should  be  excluded  from  the  Treasury, 
as  well  as  bank-notes — an  insane  procedure.  An  appeal  was 
made  to  the  people,  that  year,  upon  this  law  ;  and  they  re- 
pudiated it  by  electing  Gen.  Harrison  president.  This  law 
provided  penalties  for  any  Government  official  who  sold  gold 
and  silver  for  paper  money,  and  paid  the  debts  of  Govern- 
ment therein.  It  also  prohibited  Government  drafts  from 
being  sold  as  money.  This  was  an  epoch  to  delight  the  soul 
of  Sumner  of  Yale,  and  warm  the  cockles  of  his  frigid  heart. 

Judge  Warwick  Martin  says  of  this  singular  effort : — 

From  1837  until  1840  the  first  effort  of  the  Democratic 
party,  and  of  any  considerable  number  of  the  American 
people,   to  obtain   coin   only    for    the  Treasury    was    made. 


j6  OUR  MONEY  WARS. 

Then  it  was  advocated  by  Air.  Van  Buren  and  Mr.  Benton. 
At  first,  their  object  was  simply  to  separate  Government 
money  from  that  of  individuals,  by  divorcing  the  Govern- 
ment and  all  banks,  by  the  establishment  of  the  Sub-Treas- 
ury. But  the  question  came  up  naturally,  what  kind  of 
money  shall  be  received  and  held  in  the  Treasury  ?  The 
leaders  of  this  branch  of  the  Democratic  party  did  not  think 
of  providing  a  reliable,  sound,  uniform  currency  for  the 
people.  They  left  the  State  banks  to  supply  this  currency. 
All  Mr.  Van  Buren  and  Mr.  Benton  aimed  at  was  to  furnish 
money  for  the  Government.  They  induced  a  majority  of 
Congress  in  1840  to  pass  an  act  making  gold  and  silver  coin, 
only,  the  money  of  the  Government,  receivable  for  taxes  and 
duties.  Though  the  Government  was  then  being  sustained 
by  Treasury  notes,  this  law  excluded  them  from  the  Treasury 
also.  Mr.  Calhoun  nobly  defended  Treasury  notes  ;  showing 
their  equality  with  coin  whenever  they  had  been  tried,  and 
their  great  superiority  over  bank  notes,  whether  State  or 
National.  But  the  hard  money  prevailed  this  one  time.  As 
Treasury  notes  then  in  the  hands  of  the  people,  provided 
upon  their  face  and  in  the  laws  enacting  them,  that  they 
should  be  received  for  all  debts  due  the  Government,  the 
law  of  1840,  which  excluded  them  from  the  Treasury,  was  a 
violation  of  the  Constitution  in  that  behalf,  and  treated  it  as 
such  ;  and  the  Treasury  notes  continued  to  be  received  the 
same  as  before  this  law  passed.  No  law  ever  passed  by 
Congress,  excepting  the  sedition  law  of  John  Adams,  was  so 
unpopular  as  this  law.  The  people  had  not  called  for  it. 
It  made  a  distinction  between  the  money  of  the  Government 
and  that  of  the  people.  The  people  must  be  satisfied  with 
State  bank  notes.  The  Government  officials  must  have  hard 
money,  which  was  generally  at  a  premium  over  our  bank 
notes.  Mr.  Van  Buren  went  before  the  people  on  hard 
money  and  was  defeated,  with  all  the  office-holders  to  aid 
his  election.  This  was  the  only  opportunity  the  people  of 
the  United  States. ever  had  to  vote  upon  hard  money,  and 
they  rejected  it  and  its  advocate  and  author. 

1841. 

President  Harrison  Died  in  April,  and  Mr.  Tyler 
became  president.  One  Of  the  first  acts  of  the  Whigs 
was   to  authorize   the  issue  of  $12,000,000   of  six  per  <^ent. 


OUR  MONEY  WARS.  77 

bonds,  to  take  up  the  Democratic  Treasury  notes  ;  though 
the  people  were  satisfied  with  them,  and  they  bore  little  or 
no  interest.  This  was  an  act  to  benefit  the  capitalists,  and 
to  injure  the  people,  by  depriving  them  of  $12,000,000  of 
the  best  money,  which  they  greatly  needed,  and  imposing 
upon  them  an  annual  payment  of  $720,000  for  no  good  pur- 
pose. But  the  great  object  of  the  Whigs  was  to  establish  a 
National  bank  ;  and  the  scarcer  they  made  the  money  of  the 
country,  for  the  time  being,  the  greater  would  be  the  demand 
for  the  bank.  An  agent  was  sent  to  Europe  to  sell  the 
$12,000,000  of  bonds;  but  he  failed  to  sell  them  ;  and  the 
Whigs,  though  they  did  it  reluctantly,  were  compelled  to 
issue  Treasury  notes  to  run  the  Government.  But  Congress 
were,  as  usual,  ready  to  carry  out  the  wishes  of  the  money 
power.  They,  therefore,  chartered  a  bank  of  the  United 
States,  with  a  capital  of  $50,000,000,  which  was  vetoed  by 
Mr.  Tyler.  Another  bank  was  chartered,  called.  "  The 
Fiscal  Corporation,"  which  was  also  vetoed. 

The  Act  of  August  13,  1841,  repealed  the  Democratic 
Act  of  June,  1836,  excluding  the  notes  of  the  Bank  of  the 
United  States  from  the  Treasury  ;  and  provided  that  said 
notes  should,  thereafter,  be  received  therein ;  though  the 
bank  was  then  a  only  State  bank.  That  same  year  the  bank 
made  its  disastrous  failure.  This  act  also  repealed  the  act  of 
1840,  called  the  First  Sub-Treasury  Act ;  and  provided  that 
bank  notes  should  be  received  in  the  Treasury. 

Relief  Notes. — In  1841,  Pennsylvania  was  on  the  verge 
of  bankruptcy.  The  State  was  unable  to  pay  interest  on  the 
public  debt ;  or  even  pay  the  wages  of  laborers  for  work  done 
on  the  public  improvements.  Corporations  were  bankrupt, 
and  merchants  were  in  nearly  as  bad  a  situation.  There  was 
no  money ;  and,  consequently,  trade  and  production  were 
completely  paralyzed.  The  State  of  Pennsylvania,  in  this 
crisis,  issued  $3,100,000  of  what  was  called  "  Relief  Notes  ", 
bearing  simply  a  promise  that  they  would  be  received  by  the 
Treasury  of  the  State,  in  payment  of  all  taxes  and  other 
obligations  due  to  the  State.  These  were  taken  greedily  by 
the  people.  Banks  inserted  in  the  front  of  their  books  an 
agreement  that  the  depositor  should  receive  on  check  the 
same  kind  of  money  he  deposited,  and  then  took  these 
notes.  They  discounted  paper  with  them.  The  wheels  of 
industry  were  set  in   motion  by  these  notes,  which  promised 


•jS  OUR  MONEY  WARS. 

nothing  but  that  they  would  be  received  in  payment  of  State 
taxes.  The  State  paid  her  domestic  creditors  ;  and  these 
hastened  to  pay  theirs,  or  to  supply  their  wants  by  purchase  ; 
crops,  for  which  there  had  been  no  market,  moved.  The 
loom  and  the  spindle  were  heard  again.  Labor — lifted 
from  despair — found  work  and  wages.  With  the  great  re- 
sources of  Pennsylvania  under  full  and  free  development, 
she  was  soon  exporting  more  than  she  imported.  Gold  and 
silver — as  usual  when  not  needed — flowed  in  upon  her  ; 
and  the  broken  banks  resumed  specie  payment. 

Indiana  Treasury  Notes. — Judge  Warwick  Martin  says 
that,  in  1841,  the  State  of  Indiana  required  money  to  com- 
plete her  public  works,  and  issued  Treasury  notes  to  meet 
the  demand.  These  notes  bore  interest,  and  were  paid  out 
by  the  State  to  those  to  whom  the  State  was  indebted.  At 
first  banks  and  bankers  turned  up  their  financial  noses  at 
them  ;  but  both  the  principal  and  the  interest  were  receiv- 
able for  all  taxes  due  the  State  ;  and  it  was  not  long  until 
they  were  at  a  premium  everywhere.  "  The  writer  speaks 
from  personal  knowledge  upon  this  subject,  having  received 
and  paid  out  large  amounts  of  these  Treasury  notes.  Indiana 
has  generally  had  the  best  State  money  of  any  of  the  United 
States  ;  and  these  Treasury  notes  were  the  best  money  the 
State  ever  had.  They  were  all  redeemed  by  the  payment 
of  taxes,  as  the  law  provided  they  should  be." 

President  Tyler  had  a  good  Instinct  about  Finance. 
— He  said  in  his  Message  of  December  7,  1841  (Vol.  II.,  p. 
1261)  : — In  pursuance  to  a  pledge  given  to  you  in  my  last 
Message  to  Congress  (which  pledge  I  urge  as  an  apology  for 
adventuring  to  present  you  the  details  of  my  plans),  the  Secre- 
tary of  the  Treasury  will  be  ready  to  submit  to  you,  should 
you  require  it,  a  plan  of  finance  which,  while  it  throws  around 
the  public  treasure  reasonable  guards  for  its  protection,  and 
rests  on  powers  acknowledged  in  practice  to  exist  from  the 
origin  of  the  Government,  will,  at  the  same  time,  furnish  to 
the  country  a  sound  paper  medium,  and  afford  all  reason- 
able facilities  for  regulating  the  exchanges.  When  sub- 
mitted, you  will  perceive  in  it  a  plan  amendatory  of  the  exist- 
ing laws  in  relation  to  the  Treasury  Department — subordinate 
in  all  respects  to  the  will  of  Congress  directly,  and  the  will 
of  the  people  indirectly,  self-sustaining,  should  it  be  found 
in  practice  to  realize  its  promises  in  theory,  and  repealable, 
at  the  pleasure  of  Congress. 


OUR  MONEY  WARS.  79 

It  proposes,  by  effectual  restraints,  and  by  invoking  the 
true  spirit  of  our  institutions,  to  separate  the  purse  from  the 
sword ;  or,  more  properly  to  speak,  denies  any  other  control 
to  the  President  over  the  agents  who  may  be  selected  to 
carry  it  into  execution,  but  what  may  be  indispensably 
necessary  to  secure  the  fidelity  of  such  agents ;  and,  by  wise 
regulations,  keep  plainly  apart  from  each  other  private  and 
public  funds.  It  contemplates  the  establishment  of  a  board 
of  control  at  the  seat  of  government,  with  agencies  at  prom- 
inent commercial  points,  or  wherever  else  Congress  shall 
direct,  for  the  safe-keeping  and  disbursement  of  the  public 
moneys,  and  a  substitution,  at  the  option  of  the  public  credi- 
tor, of  Treasury  notes  in  lieu  of  gold  and  silver.  It  proposes 
to  limit  the  issues  to  an  amount  not  to  exceed  $15,000,000, 
without  the  express  sanction  of  the  legislative  power.  It 
also  authorizes  the  receipt  of  individual  depositors  of  gold 
and  silver  to  a  limited  amount,  and  the  granting  of  certifi- 
cates of  deposit,  divided  into  such  sums  as  may  be  called  for 
by  the  depositors.  It  proceeds  a  step  further,  and  authorizes 
the  purchase  and  sale  of  domestic  bills  and  drafts,  resting 
on  real  and  substantial  basis,  payable  at  sight,  or  having  but 
a  short  time  to  run,  and  drawn  on  places  not  less  than  100 
miles  apart ;  which  authority,  except  in  so  far  as  may  be 
necessary  for  Government  purposes  exclusively,  is  only  to  be 
prohibited  by  the  State  in  which  the  agency  is  situated. 

I  am  not  able  to  perceive  that  any  fair  and  candid  ob- 
jection can  be  urged  against  the  plan,  the  principal  outlines 
of  which  I  have  thus  presented.  I  cannot  doubt  but  that 
the  notes  which  it  proposes  to  furnish  at  the  voluntary  op- 
tion of  public  creditors,  issued  in  lieu  of  the  revenue  and  its 
certificates  of  deposit,  will  be  maintained  at  an  equality  with 
gold  and  silver  everywhere.  They  are  redeemable  in  gold 
and  silver  on  demand,  at  the  places  of  issue.  They  are  re- 
ceivable everywhere  in  payment  of  Government  dues.  The 
Treasury  notes  are  limited  to  an  amount  of  one-fourth  less 
than  the  estimated  annual  receipts  of  the  Treasury,  and  in 
addition,  they  rest  upon  the  faith  of  the  Government  for 
their  redemption.  If  all  these  assurances  are  not  sufficient 
to  make  them  available,  then  the  idea,  as  it  seems  to  me,  of 
furnishing  a  sound  paper  medium  of  exchanges,  may  be  en- 
tirely abandoned. 

The  President  of  the  Bank  of  England. — When  the 


8o  OUR  MONEY  WARS. 

Phila.  Bank  of  the  United  States  failed,  in  1841,  that  institu- 
tion was  largely  in  debt  to  the  Bank  of  England.  The 
president  of  the  latter  bank  came  to  the  United  States  to 
look  after  this  debt.  When  he  landed  in  New  York,  he 
read  in  the  papers  the  Message  of  President  Tyler,  recom- 
mending that  the  permanent  money  of  the  country  should 
be  issued  by  the  Government.  He  lost  no  time  in  visiting 
Washington  and  the  White  House  ;  where  and  when  he  ex- 
pressed his  admiration  of  the  monetary  system  advocated  by 
President  Tyler;  and  stated  that  it  should  be  adopted  not 
only  by  the  United  States,  but  by  England  and  every  other 
great  nation. 

1842. 

The  United  States  Could  not  Borrow. — The  Act  of 
April  15,  1842,  extends  the  time  for  selling  the  $12,000,000, 
of  bonds  one  year,  and  provides  that  the  loan  might  be  made 
to  extend  any  time  that  the  Secretary  'and  the  purchaser 
might  agree  upon  :  not  beyond  twenty  years.  It  also  added 
$5,000,000  to  the  loan.  The  stock  is  allowed  to  be  sold  at 
less  than  par,  if  the  President  agreed  thereto.  No  such 
thing  had  occurred  since  the  close  of  the  war  of  18 12.  The 
United  States  did  not  owe  $30,000,000  at  that  time  ;  and 
they  could  not  sell  $12,000,000  of  bonds  at  par;  though 
taxes  and  duties  were  pledged  for  their  payment.  The  Whigs 
were  compelled  to  fall  back  upon  Treasury  notes.  These 
notes  were  then  bearing  only  nominal  interest ;  but  the 
Whigs  provided,  in  this  act,  that  all  Treasury  notes  then  out 
and  those  issued  thereafter  should  bear  six  per  cent,  in- 
terest; and  that  they  should  be  redeemed  as  soon  as  bonds 
could  be  sold  for  that  purpose.  These  are  the  facts,  though 
the  Treasury  notes  were  in  good  credit,  and  the  people  were 
satisfied  with  them.  But  a  war  was  going  on  between  the 
Whig  Congress  and  President  Tyler.  The  latter  advocated 
the  issuing  of  all  the  paper,  as  well  as  the  metallic  money  by 
the  Government  ;  but  Congress  wished  the  paper  money 
issued  by  a  National  bank.  The  President  vetoed  the  bank 
bill.  Congress,  by  way  of  heading  him  off,  passed  the  act 
to  make  Treasury  notes  bear  six  per  cent,  interest,  instead  of 
being  used  as  money. 

The  Act  of  June  30,  1842,  provided  for  the  issue  of 
$5,000,000  Treasury  notes  to  run  one  year,  which  were  legal 


OUR  MONEY  WARS.  81 

tender  for  all  debts  to  the  Government,  and  were  to  be  paid 
to  such  public  creditors  and  others  as  were  willing  to  receive 
them.  The  creditors  always  preferred  them.  The  Secretary 
of  the  Treasury  is  authorized  to  have  these  Treasury  notes 
placed  to  his  credit  in  banks  at  par  and  accrued  interest  or 
otherwise,  to  borrow  money  upon  them.  The  interest  upon 
these  notes  was  five  per  cent. 

The  Act  of  August  31,  1842,  makes  certain  further  pro- 
visions respecting  the  sale  of  the  $17,000,000  bonds  which 
had  not  yet  taken  place.  This  act  provides  that  unless  they 
could  be  sold  at  par,  the  Secretary  of  the  Treasury  should 
issue  $6,000,000  Treasury  notes.  They  were  compelled  to 
have  recourse  to  what  Jefferson  calls  the  only  resource  of  a 
nation.  The  Treasury  notes  authorized  by  this  act  may  be 
reissued. 

1843. 

The  Act  of  March  3,  1843,  fixed  the  value  in  the  United 
States  of  certain  foreign  coins.  The  thaler  of  Prussia  is 
made  68  cents-,  the  milric  of  Portugal  $1.12  •,  the  rex  dollar 
of  Bremen  77  cents;  the  milric  of  Madeira  $1.00;  the  milric 
of  the  Azores  83^  cents  ;  the  mark  banco  of  Hamburg  35 
cents;  the  rouble  of  Russia  75  cents;  the  rupee  of  British 
India  44^  cents.     This  was  Whig  law. 

An  Act  of  March  3,  1843,  authorizes  the  issue  of  new 
Treasury  notes  to  supply  the  place  of  those  redeemed  ;  and 
that  interest  should  be  paid  upon  Treasury  notes  after  their 
maturity.  The  act  provides  that  bonds  may  be  issued  for 
Treasury  notes,  that  shall  run  three  years. 

Sumner  of  Yale  Explains  Things. — Discussing  the 
affairs  of  1843,  in  his  "  Currency  ",  which  was  not  written  in 
Bloomingdale  Insane  Asylum,  that  marvelous  genius,  Sumner, 
says  :  "  The  cases  we  have  had  to  deal  with  hitherto  have 
presented  us  with  the  simple  phenomenon  of  the  exportation 
of  precious  metals  and  increased  importation  of  commodi- 
ties, due  to  the  repetition  of  the  grossest  error  possible  in 
currency — the  attempt  to  use  two  kinds  of  circulating  me- 
dium :  one  inferior  to  the  other."  Yet,  in  all  this  time — 1600 
to  1843, — ne  has  never  shown  how  our  people  could  have  got 
the  necessary  coin.  He  is  evidently  like  the  philosopher  who 
replied  to  the  man  who  excused  some  action  of  his  by  say- 
ing, "  Well,  I  must  live  !  "  by  the  very  positive  retort :  "  I 
6 


82  OUR  MONEY  WARS. 

am   not  so   sure  of  that."     Sumner's  icy  dictum  is  :   "  Do  it 
or  die  !  " 

Further  on,  this  serene  sage  says  :  "  The  movement  of 
specie  would,  therefore,  be,  if  the  whole  world  used  the 
metals,  and  regulated  prices  by  them,  without  interference,  as 
regular,  as  self-controlled,  and  as  beneficent  as  the  movement 
of  the  tides."  The  fact  is  that  the  action  of  the  tides  is  con- 
trolled— like  much  of  Sumner's  cerebral  action — by  the 
moon  (Juno). 

Well,  what  can  you  expect  of  a  man  whose  fetish  is  that 
prodigious  rubbish,  "The  British  Bullion  Report  of  1810," 
of  which  he  says  :  "  So  much,  however,  in  regard  to  the  laws 
which  govern  paper  issues,  as  was  laid  down  in  the  Bullion 
Report,  is  established  beyond  dispute.  Its  doctrines  are  the 
alphabet  of  modern  finance  !  "  Any  one  who  wants  to  read 
this  precious  document  will  find  it  as  an  appendix  to  Sum- 
ner's book.  Read  it,  and  "  learn  with  how  little  wisdom 
nations  are  governed." 

1845. 

The  Act  of  March  3,  1845,  fixed  the  value  of  the  florin 
of  Russia  at  48  cents.  This  was  also  a  Whig  act,  and  one  of 
the  last  approved  by  Mr.  Tyler. 


In   1845   the  Democrats  came   into    power    again.     They 
fought  the  Mexican  War  with  Treasury  notes. 


UUK  MONEY  WARS.  83 


CHAPTER   X. 

1846  to  1856. 
1846. 

The  Act  of  May  22,  1846,  regulated  the  value  in  the  United 
States  of  the  following  foreign  coins  :  Of  Norway,  Sweden, 
Denmark,  Prussia,  Northern  and  Southern  Germany,  Austria, 
Belgium,  Augsburg,  Sardinia,  Naples,  Nova  Scotia,  and  New 
Brunswick.  Previous  to  this  act  these  coins  were  not  money 
in  the  United  States.  No  foreign  coins  are  money  here  now. 
They  have  all  been  demonetized. 

The  Act  of  July  22,  1846,  makes  the  following  provis- 
ions :  1.  That  Treasury  notes  should  be  issued  to  take  the 
place  of  those  destroyed,  to  the  extent  of  $10,000,000  only  of 
this  issue.  2.  If  the  President  saw  proper  he  might  issue 
stock  in  place  of  Treasury  notes.  3.  This  act  provides  for 
the  payment  of  $50,000  Treasury  notes  which  had  been 
stolen. 

The  Act  of  August  6,  1846,  Establishes  the  Indepen- 
dent Treasury,  which  had  been  attempted  in  1840,  but  had 
failed.  The  law  of  1840  was  repudiated  by  the  people.  The 
law  of  1846  was  sustained  by  the  people,  of  all  parties,  from 
1846  until  1861  ;  and  many  of  its  provisions  are  still  con- 
tinued. The  principal  difference  between  the  two  acts  was, 
that  the  law  of  1840  excluded  all  Treasury  notes  as  well  as 
bank  notes  from  the  Treasury  after  January  1,  1843  ;  bat  the 
law  of  1846  made  all  Treasury  notes  issued  by  the  United 
States,  and  gold  and  silver  coins,  equal  in  the  payment  of  all 
debts  due  the  Government. 

This  act  divorced  the  Government  from  all  banks,  exclud- 
ed all  bank  notes  from  the  Treasury,  and  made  all  Treasury 
notes  legal  tender,  the  same  as  coin,  in  payment  to  the  United 
States.  It  also  provided  that  the  officers  of  the  Government, 
under  bonds,  should  receive  and  keep  all  the  money  of  the 
United  States,  and  deposit  the  same  in  the  Treasury,  instead 
of  in  banks  ;  and  that  the  money  of  the  Government   should 


84  OUR  MONEY  WARS. 

be   kept  separate  from  that  of  individuals.     This  was  one  of 
the  best  laws  ever  enacted  by  the  Democratic  party. 

1847. 

Money  for  the  Mexican  War. — The  Act  of  January  28, 
1847.  The  Mexican  War  was  then  in  progress.  The  expend- 
itures of  the  Government  were  large.  An  emergency  ex- 
isted. The  remedy  of  which  Jefferson  speaks  was  at  hand. 
A  large  issue  of  Treasury  notes  was  ordered.  Twenty-three 
millions  were  provided.  This  was  a  large  sum  for  those 
times;  more  than  $500,000,000  would  be  now.  The  rate  of 
interest  on  this  $23,000,000  Treasury  notes  is  not,  provided 
by  law.  It  is  left  to  the  Secretary  of  the  Treasury,  and  the 
party  to  whom  they  were  paid.  These  notes  were  intended 
to  be  used  as  money ;  and  if  parties  would  take  them  at  one 
mill  interest,  the  Secretary  had  a  right  to  issue  them.  Many 
of  them  were  so  issued  and  used ;  greatly  to  the  satisfaction 
of  the  people. 

Speculations  and  Panic  of  1847. — Previous  to  1847,  all 
the  banks  of  the  United  States  had  professed  resumption. 
In  this  year,  immense  speculations  took  place  in  corn,  wheat, 
Hour,  pork,  beef,  and  all  kinds  of  American  productions. 
Large  purchases  were  made  of  these  commodities,  which 
were  shipped  to  England.  Prices  fell  after  the  purchases 
and  the  arrival  of  the  produce  at  its  place  of  destination. 
Many  failures  took  place  in  both  countries,  as  a  consequence 
of  these  speculations.  Be  it  remembered  that  the  money  to 
engage  in  the  speculations  was  not  suspended  bank  paper, 
or  the  notes  of  the  Government.  On  the  contrary,  all  the 
money  for  these  speculations  was  furnished  by  banks  of 
the  United  States,  which  at  that  time  professed  to  pay  coin 
for  all  their  liabilities. 

[S.  Leavitt  had  reason  to  remember  this  speculation  ;  for 
his  father  was  drawn  into  it  and  bankrupted  by  it,  though  he 
got  safely  through  the  panic  of  1837.] 

Nearly  every  witness  who  testified  before  the  secret  com- 
mittee of  the  House  of  Commons,  in  1857,  agreed  that  gold 
could  only  be  held  by  paralyzing  the  business  of  the  country. 
It  is  estimated,  by  witnesses  who  testified  before  that  com- 
mittee, that  in  the  panic  of  1847,  m  Great  Britain,  the  prop- 
erty of  the  country,  by  reason  of  the  measures  rendered 
necessary  to  maintain  the  single  gold  standard,   was   depre- 


OUR  MONEY  WARS.  85 

ciated  $1,500,000,000.  J.  W.  Shuckers  says  that  the  Bank 
of  England  made  untold  millions  out  of  this  panic. 

France  Helped  the  Whole  World. — A  way  in  which 
France  has  singularly  helped  the  whole  world  is  seen  in  her 
resolute  maintenance  of  the  ratio  of  15^  silver  to  one  of 
gold,  during  all  this  century. 

This  fact  was  described  by  Senator  Jones,  of  Nevada,  in 
his  speech,  in  April,  1890,  in  the  Senate,  thus  : 

"  Not  only  did  the  French  law  keep  the  metals  together 
at  that  time,  when  the  larger  annual  yield  was  of  silver,  but 
it  kept  them  together  when  the  larger  annual  yield  was  of 
gold.  Had  not  that  law  been  in  operation  during  the  Fifties, 
when  a  flood  of  gold  poured  from  the  mines  of  California 
and  Australia,  gold  would  have  fallen,  as  in  early  times  it 
more  than  once  fell,  to  the  ratio  of  1  to  10;  at  which  but  10 
ounces  of  silver  (instead  of  15^2)  would  buy  an  ounce  of 
gold.  Thus  the  law  of  one  country  alone — a  country  then 
of  not  more  than  one-half  the  population  of  the  United 
States — held  the  metals  together  ;  so  that  to  whatever  ex- 
tent gold  fell  in  relation  to  commodities,  from  1848  to  1S65, 
by  reason  of  the  large  output  of  the  mines,  silver  fell  to  the 
same  extent ;  notwithstanding  the  enormous  decrease  in  its 
production  relatively  to  gold,  during  that  period." 

Of  course  there  was  no  logical  propriety  about  this  ;  but 
it  was  fortunate — since  most  of  the  world  still  wishes  to  in- 
dulge in  the  luxury  of  commodity  money — that  France  thus 
helped  to  prevent  fluctuation  in  the  currency. 

According  to  the  statement  of  Mr.  Pierson,  Netherlands 
commissioner  before  the  International  Monetary  Conference 
of  188 1,  in  1803  bimetallism  was  established  in  France  and 
continued  until  1873. 

From  1803  to  1820  there  was  a  yield  of  four  times  as  much 
silver  from  the  mines  as  gold ;  after  that,  until  i860,  the  yield 
of  the  metals  was  reversed,  and  the  mine  output  was  four 
times  as  much  gold  as  silver.  The  coinage  in  France  from 
1820  to  1847  was  nine  times  more  silver  than  gold,  and  from 
1857  to  1866  the  coinage  was  sixty-four  times  more  gold 
than  silver ;  and  yet,  in  all  these  eighty  years  of  fluctuation 
in  metallic  production,  while  her  silver  money  averaged  69 
per  cent,  to  31  per  cent,  of  her  gold  money,  the  variation  in 
the  market  rate  between  gold  and  silver  bullion  was  never 
more  than  2  per  cent. ! 


86  OUR  MONEY  WARS. 

1848. 

Speculation  and  overtrading  had  not  much  to  do  with 
the  panic  of  1S48.  The  abdication  of  Louis  Philippe,  and 
the  Revolution  in  France,  had  most  to  do  with  it. 

1849. 

The  Act  of  March  3,  1849,  Created  the  Gold 
Dollar  and  the  Double  Eagle. — The  one  was  to  be  of  the 
value  of  a  dollar  and  the  other  of  twenty  dollars.  The  only 
dollar,  that  had,  thus  far,  been  created  and  coined  was  the 
silver  dollar.  This  law  did  not  make  a  gold  dollar,  but  it 
did  make  a  gold  piece  of  the  value  of  a  dollar.  This  is  the 
reading  of  the  statute.  There  has  never  been  in  the  United 
States  a  piece  of  gold  called  in  the  law  $1,  $2.50,  $5,  or 
$10.  The  gold  pieces  have  been  of  the  value  of  $1,  of  $2.50, 
of  $5,  of  $10,  and  of  $20.  All  of  them  were  made,  by  the 
laws  creating  them,  legal  tender  with  the  dollar.  The  dol- 
lar was  the  unit  of  value  and  of  the  money  of  account,  by 
which  gold  was  valued. 

Wild  Cats  in  New  England. — There  was  "  heaps  of 
money  "  in  running  State  banks  in  those  days,  "  while  the 
thing  lasted."  The  extent  to  which  these  banks  were  enabled 
to  loan  their  credit  by  means  of  the  specie  basis  will  appear 
from  an  examination  of  the  report  of  the  Commissioners  of 
the  banks  of  Connecticut,  for  a  period  of  12  years,  from  1837 
to  1849.  The  condition  of  Connecticut  banks  may  be  taken 
as  an  average  of  the  banks  of  the  country.  The  Connecticut 
report  shows  :  Average  capital,  $8,688,295  ;  average  liabili- 
ties, $13,129,230;  average  specie,  $478,719;  average  loans 
and  discounts,  $11,669,457. 

1850. 

Gold  Down.  Silver  Up. — After  the  discovery  of  vast 
fields  of  gold  in  California  and  Australia,  in  1849,  1&S° 
and  1851,  there  was  great  demand  for  silver  coin  for  the  pur- 
chase of  gold  ;  and  the  impression  becoming  general  that 
these  large  acquisitions  of  gold  would  depreciate  its  value,  a 
universal  disposition  was  manifested  among  bullionists  to 
exchange  gold  for  silver.  This  caused  United  States, 
Spanish,  Mexican,  and  Central  and  South  American  silver 
dollars  to  rise  to  a  premium  of  two  and  three  per  cent,  for 
gold,  at  which  price  the  Rothschilds  purchased  them,  not 


OUR  MONEY  WARS.  87 

only  in  the  United  States,  but  in  all  the  European  markets 
of  exchange.  That  the  law  of  1834  was  not  the  only  or 
principal  cause  of  these  purchases  of  silver,  is  evident  from 
the  fact  that  they  were  not  confined  to  the  United  States, 
but  existed  in  Europe  to  a  greater  extent  than  here.  There 
the  relation  of  1  to  16  did  not  exist.  But  one  other  fact  had 
greater  influence  in  causing  this  result.  About  this  time, 
commercial  treaties  were,  for  the  first  time,  entered  into  be- 
tween China,  the  United  States  and  Great  Britain.  Silver 
dollars  were  the  principal  circulation  of  China.  The  Chinese 
were  ignorant  of  the  fact  that,  in  Europe,  silver  was  worth 
1SlA  pounds  of  silver  to  1  pound  of  gold,  and  in  America  16 
to  1.  The  Chinese  used  gold  blocks  for  large  transactions, 
and  they  valued  gold  at  only  one  to  5.  There  a  pound  of 
gold  was  worth  only  five  pounds  of  silver,  while  in  Europe  it 
was  worth  15^,  and  in  America  16  pounds  of  silver.  Large 
quantities  of  dollars  were  therefore  sent  from  all  parts  of 
Europe  to  purchase  this  gold  in  China.  China  was  drained 
of  gold  and  filled  with  silver  dollars.  Europe  and  America 
were  drained  of  silver  dollars  and  well  supplied  with  gold. 
Owing  to  these  facts  Holland  demonetized  gold. 

John  Thompson  said  to  me  :  "  As  to  gold  being  related  to 
silver  as  one  to  five  in  China,  it  seems  like  an  immense 
speculation  ;  and  many  might  suppose  that  Europeans  made 
great  fortunes  out  of  it,  before  the  Chinese  discovered  the 
trick.  But  I  know  that  this  was  not  so  ;  because  there  was 
so  little  gold  in  China." 

1851. 

Bank  Notes  in  Australia. — In  185 1  nearly  all  the 
silver  of  Europe  was  sent  to  Australia  to  be  invested  in 
gold.  When  Great  Britain  v/as  thus  drained  of  silver,  and  no 
more  could  be  sent  to  meet  this  demand,  the  British  Govern- 
ment authorized  the  establishment  of  a  bank  in  Australia, 
the  notes  of  which  were  to  be  paid  out  for  gold  bullion,  in- 
stead of  silver  coin.  The  bank  was  authorized  to  issue 
three  dollars  or  pounds  sterling  of  notes  to  every  dollar  or 
pound  sterling  of  gold  bullion  held  by  the  bank  ;  and  said 
notes  were  made  by  the  law  creating  the  bank  legal  tender 
the  same  as  coin.  The  result  was  that  all  the  bullion  and 
coin  went  into  the  bank,  and  the  notes  of  the  bank  circulated 
among  the  people  in  the  business  of  the  country,  though 


88  OUR  MONEY  WARS. 

they  were  the  notes  of  a  bank  only,  not  those  of  a  nation. 
Thus  England  always  protects  her  own  interests  and  her 
own  (rich)  people,  at  least,  while  the  Congress  of  the  Urn\ed 
States  legislates  for  the  benefit  of  England. 

The  following  is  the  Journal  des  Economistes*  table  of  the 
production  of  gold  and  silver  from  1852  to  1876  : 


Date. 

Gold, 
millions. 

Silver, 
millions. 

Total. 

1852 

182^ 

40^2 

223 

1853 

J55 

4o}^ 

*95lA 

1854 

127 

40^ 

i67y2 

i855 

135 

40^ 

vsA 

1856 

i47>^ 

\°XA 

188 

1857 

*33 

4°A 

173^ 

1858 

\2\Yz 

4oy2 

165 

1859 

124^ 

4°A 

165 

i860 

119 

4°A 

*S9A 

1861 

114 

42  a 

156^ 

1862 

107^ 

45 

152^ 

1863 

IO7 

49  , 

156 

1864 

"3 

5*5* 

164^ 

1865 

120 

52  , 

172 

1866 

121 

50  A 

171^ 

1867 

116 

54 

170 

1868 

120 

5° 

170 

1869 

121 

47^ 

i6%y2 

1870 

116 

s*X 

ie7y2 

1871 

116^ 

61 

l77A 

1872 

IOI>2 

65 

166A 

1873 

103^ 

70 

mA 

1874 

90^ 

nlA 

162 

1875 

97^ 

62 

J59^ 

1853. 

The  Act  of  February  26,  1853,  Created  the  First 
Limited  Legal-tender  coin  in  the  United  States.  Pre- 
viously all  United  States  gold,  silver,  and  copper  coins  had 
been  full  legal  tender.  The  rich  and  the  poor  had  the 
same  money.  Now,  and  since  1853,  we  have  one  money  for 
the  rich,  and  another  money  for  the  poor,  as  the  nations  of 
Europe  have.  Under  this  law  halves,  quarters,  and  dimes 
were  made  over  seven  per  cent,  light,  and  lawful  money  for 


OUR  MONEY  WARS. 


89 


$5  only.  They  were  as  good  as  the  silver  dollar,  or  gold,  up 
to  $5.  Above  that  sum  they  were  not  money,  but  light 
bullion.  Two  half  dollars  have,  under  this  law,  384  grains 
standard  silver — 2%x/2  less  than  the  dollar.  This  act  was 
among  the  last  approved  by  a  Whig  President.  It  should  be 
repealed. 

The  Clearing-house,  which  had  been  suggested  by 
Albert  Gallatin,  in  1841,  was  finally  established  in  1853,  on 
the  plan  of  Mr.  George  Curtis. 


9° 


OUR  MONEY  WARS. 


CHAPTER  XI. 

1856  to  1861. 
1857. 

The  Panic  of  1857. — Here  we  enter  another  great  finan- 
cial epoch.  Proposing  to  give  several  explanations  from 
reliable  authorities  of  the  causes  of  the  terrible  panic  of 
1857,  we  begin  with  a  short  one  from  an  unknown  writer — 
which  seems  to  touch  bottom  as  to  the  cause  that  "  lay 
nearest  to  it."     Here  it  is  : — 

The  immediate  cause  is  not  generally  known.  It  was  this  : 
In  the  latter  part  of  1857,  when  the  Bank  of  England  was 
struggling  to  maintain  specie  payments,  it  came  into  the  New 
York  market  and  sold  about  seven  million  dollars  worth  of 
American  securities ;  and  took  the  gold  from  the  banks  of 
that  city.  Knowing  the  condition  of  that  huge  bank,  and 
that  it  had  plenty  of  American  securities,  the  New  York 
banks  became  exceedingly  alarmed,  and  began  to  contract 
and  call  on  the  country  banks  for  gold. 

"  Hinc  illce  lachrymce  !  " 

Here  is  one  of  the  deep  causes  : 

The  Act  of  February  21,  1857,  Demonetized  all 
Foreign  Coins  in  the  United  States.  It  was  done  by  the 
Democratic  party.  It  was  a  strange  act  for  those  who  favor 
hard  money,  and  insist  that  the  law  does  not  make  metallic 
money  ;  but  that  the  metal  is  money  without  authority  of 
law  and  without  the  stamp  of  the  nation,  as  a  few  ignorant 
Democrats  now  do.  Since  February  21,  1857,  no  foreign 
coin  has  been  money  in  the  United  States,  because  the  laws 
of  1857  and  1873  say  it  shall  not  be.  The  law  makes  and 
unmakes  money.  The  law  of  1873  was  a  Republican  act. 
The  law  of  1857  also  created  a  new  cent  and  three-cent  piece, 
composed  of  88  parts  copper  and  12  parts  nickel,  which  were 
made  full  legal  tender,  and  were  to  be  used  to  redeem  the 
old  heavy  cents.  This  law  introduces  a  new  metal  into  our 
coinage.  We  refer  to  nickel.  It  had  never  before  been 
used.     It   is    not   named   in   the     Constitution.     Have    the 


OUR  MONEY  WARS.  91 

Democrats  violated  the  Constitution  by  vising  this  metal  ? 
We  think  not.  The  signing  of  this  act  was  one  of  the  last 
acts  of  Mr.  Pierce.  It  was  in  favor  of  the  bullion  brokers. 
So  long  as  all  foreign  coins  were  money  they  could  not  buy 
and  sell  them  at  a  profit. 

Now  for  Stephen  Colwell. 

The  panic  of  1837  roused  that  great  and  noble  New  York 
merchant,  Kellogg,  to  write  his  "  New  Monetary  System." 
The  panic  of  1857  roused  that  equally  great  and  noble  Phil- 
adelphia merchant,  Stephen  Colwell,  to  write  his  "  Ways  and 
Means  of  Payment."  Here  is  some  of  his  talk  about  the 
immediate  effect  of  the  latter  panic  : — The  late  panic  lias 
inflicted,  in  all  its  bearings  and  ramifications,  a  loss  upon  the 
country  which  maybe  variously  estimated  from  $500,000,006 
to  $1,000,000,000.  No  doubt  the  ill-effects  of  the  panic  were 
much  enhanced  by  the  previous  abuse  of  credit,  and  that  a 
considerable  portion  of  this-  devastation  should  be  set  down 
to  that  account.  With  every  allowance  in  that  respect  we 
shall  have  a  vast  sum  of  loss  to  charge  to  the  panic.  And 
whether  this  sum  be  $400,000,000  or  $800,000,000  matters 
not,  to  our  view.  The  hiss  was  to  a  great  extent  unnecessary, 
cruel,  terrible. — a  loss  which  has  carried  privation,  distress 
and  ruin  to  a  million  of  homes.  For  a  time,  at  least,  not  yet 
passed,  it  reduced  hundreds  of  thousands  of  the  best  people 
to  a  state  of  entire  dependence,  if  not  beggary. 

What  was  the  occasion  of  these  dire  calamities  ?  The 
banks  of  the  United  States  had  a  reserve  of  specie  for  several 
years  previous  to  1857 — and  during  the  first  half  of  that  year 
— amounting  to  somewhat  over  $50,000,000 ;  and  of  this  the 
banks  in  the  city  of  New  York  held  a  little  more  than  one- 
fifth.  To  save  this  amount  of  specie  [from  going  to  Eng- 
land.— S.  L.]  the  banks  contracted  the  currency  one-half  ; 
denied  the  usual  facilities  upon  their  books;  put  up  the  rate 
of  interest  to  from  12  to  36  per  cent.  ;  put  down  exchange 
upon  England  to  nine  or  ten  per  cent,  below  par ;  reduced 
the  revenue  from  customs  to  less  than  half  the  usual  amount ; 
drew  a  surplus  of  $20,000,000  of  gold  out  of  the  public 
Treasury ;  drove  the  Government  to  an  issue  of  paper 
promises  to  pay  its  current  expenses  ;  deprived  hundreds  of 
thousands,  perhaps  millions,  of  their  customary  employment; 
caused  some  5,000  or  6,000  failures  among  men  of  business; 
and,  finally,  inflicted  a  loss  on  the  country,  in  the  depreciation 


92 


OUR  MONEY  WARS. 


of  securities,  in  the  reduction  of  prices,  and  by  insolvency, 
of  several  hundred  millions.  Not  to  save  this  sum  of  $50,- 
000,000  from  being  lost,  sunk  in  the  ocean,  or  thrown  away, 
were  all  these  evils  encountered  ;  but  merely  to  prevent  it 
from  passing  into  circulation  among  the  people  ;  or,  at  the 
worst,  to  prevent  it  from  being  exported  in  payment  of  debts 
due  in  foreign  countries.  Nine-tenths  of  the  debts  of  the 
country  are  paid,  as  we  have  seen,  by  the  agency  of  discounts 
and  deposits  ;  with  some  aid  from  the  circulation  of  the 
banks:  But  the  banks  have  been  placed  under  such  heavy 
penalties  to  pay  all  their  liabilities  on  demand,  that  when 
they  are  threatened  with  a  panic,  a  commercial  revulsion,  or 
a  heavy  export  of  specie  to  foreign  countries,  they  are  com- 
pelled— like  Samson  in  the  temple  of  the  Philistines — to 
pull  down  the  whole  fabric  of  credit,  public  and  private, 
about  the  ears  of  the  people-,  to  disturb  and  check  the  prog- 
ress of  industry  in  all  its  departments ;  to  make  bankrupts 
of  their  customers  ;  and  to  sow  pauperism  broadcast  in  .the 
field  of  labor. 

This  compelled  policy  of  the  banks,  under  the  stringency 
of  the  laws  which  govern  them,  has  been  called  "  paying 
specie.''  But  with  how  little  propriety.  Instead  of  paying 
their  liabilities  with  commercial  promptness,  and  the  faith- 
fulness of  those  who  are  discharging  a  legal  and  moral 
obligation,  they  resist  it  with  all  the  power  and  weapons 
they  can  command.  In  the  struggles  incident  to  this  resist- 
ance, they  strike  down  friends  as  well  as  enemies  ;  and  de- 
prive the  public  of  an  amount  of  currency,  necessary  to  busi- 
ness, ten  times  greater  than  the  specie  they  are  unwilling  to 
pay  out.  And  this  is  the  convertibility  so  long  aimed  at. 
and  to  secure  which  so  much  legislation  and  so  much  thought 
has  been  expended  ! 

This  is  the  triumph  of  banks  which  pass  through  a  season 
of  panic  and  revulsion  without  suspension  [like  Chemical 
Bank  of  New  York. —  S.  L.] — a  triumph  like  the  victory  which 
leaves  100,000  dead  bodies  on  the  field  of  battle;  which 
makes  10,000  widows,  50,000  orphans  and  200,000  paupers. 


Remember,  in  reading  the  above,  that  Stephen  Colwell 
was  a  rich,  prosperous  merchant,  not  upset  by  that  panic  or 
any  other. 

Here  is  what  the  always  profound  and  reliable  Judge  War- 


OUR  MONEY  WARS.  93 

wick  Martin  says,  in  a  chapter  in  which  he  refutes  the  idea 
that  American  panics  have  been  caused  by  speculation  : — 

The  suspension   of   1857  was  not  caused  by  speculation. 
The  causes  were:    1.  The  attempt  to   enforce  specie  basis. 

2.  In  1853  Congress  demonetized  all  silver  halves,  quarters 
and  dimes  in  sums  over  $5.  Much  of  the  reserves  of  the 
banks  were  in  these  fractional  silver  coins,  which  were  full 
legal  tender,  and  in  gold  and  silver  coins  of  the  United 
States  and  of  other  countries.  The  silver  dollars  of  Spain, 
Mexico,  South  America,  and  the  United  States  were  worth 
a  premium  over  gold,  and  were  purchased  by  the  Rothschilds 
and  sent  out  of  the  country.  The  banks  did  not,  therefore, 
hold  them  as  reserves.  The  demonetization  of  these  frac- 
tional silver  coins  deprived  the  banks  of  a  large  portion  of 
the.ir  leserves,  and  of  paying  their  circulation  therein,  these 
coins   under  the  law  of  1853  being  legal   tender  for  $5    only. 

3.  Up  to  February,  1857,  all  foreign  gold  coins  and  the  silver 
coins  of  most  nations   were,  in  the  United  States,  full  legal 

..tender  with  our  coins,  at  the  values  fixed  by  our  laws  ;  and 
gold  being,  since  1S34,  over-valued  in  the  United  States, 
immense  quantities  of  these  gold  coins  came  to  the  United 
States  and  remained.  They  were  also  held  by  the  banks  as 
reserves  in  large  quantities.  But  on  the  21st  of  February, 
1857,  Congress  demonetized  all  foreign  coins  of  both  gold 
and  silver.  These  coins  held  by  the  banks  as  reserves  were, 
after  the  passage  of  this  law,  no  longer  legal  tender  in  pay 
ment  of  debts,  and  the  banks  could  not  use  them  at  par  to 
meet  their  liabilities.  They  were  compelled  to  sell  them  at 
their  home  value  instead  of  at  the  value  fixed  upon  them  by 
the  former  laws  of  the  United  States.  They  were,  therefore, 
sold  and  sent  out  of  the  country  in  large  quantities,  never 
again  to  return.  It  will  be  seen  that  the  laws  of  1853  and 
of  1857  greatly  diminished  the  full  legal-tender  gold  and  sil- 
ver coins  of  the  United  States,  reducing  the  reserves  of  the 
banks,  and  rendering  them  incapable  of  standing  runs  upon 
them  for  coin.  4.  The  law  of  1846  divorced  the  Govern- 
ment from  all  banks  and  excluded  all  bank-notes  from  the 
Treasury,  confining  the  receipts  therein  to  gold,  silver,  and 
Treasury  notes.  This  law  was  intended  to  weaken  confi- 
dence in  banks  and  in  their  circulation,  and  it  had  that 
effect.  It  was  in  force  in  185,7  and  up  to  1861.  These  four 
causes  combined  prepared  all   the  banks  for  suspension  as 


94 


OUR  MONEY  WARS. 


soon  as  any  disturbing  influence  arose  in  the  banking  or  the 
commercial  world.  5.  This  disturbing  influence  made  its 
appearance  in  the  failure  of  the  Ohio  Life  Insurance  and 
Trust  Company  in  the  fall  of  1857.  This  bank  had  a  capital 
of  $2,000,000  and  unbounded  credit.  The  banks  of  the 
West  kept  large  deposits  with  the  New  York  agency.  The 
entire  solvency  of  the  bank  had  not  been  suspected.  Its 
credit  had  never,  up  to  the  day  of  its  failure,  been  doubted. 
Its  failure  fell  upon  Wall  Street  like  a  clap  of  thunder  in  a 
cloudless  sky.  It  destroyed  confidence  in  banks.  A  run  at 
once  commenced  for  coin  which  the  banks  could  not  meet. 
The  banks  of  New  York  and  New  England  suspended,  as 
banks  always  do  under  such  circumstances,  and  those  of  the 
West  and  South  followed. 

[Mr.  Martin  does  not  seem  to  know  that  a  principal  cause 
was  a  strong  pull  on  gold  from  the  Bank  of  England. — S.  L.] 

Treasury  Notes  Again. — The  winter  session  of  Congress 
raised  the  courage  to  issue  Treasury  notes.  The  Act  of  De- 
cember 23,  1857.  provides  for  the  issue  of  $20,000,000  Treasury 
notes,  to  take  the  place  of  coin  ;  the  banks  having  suspended 
with  the  coin  in  their  vaults.  The  rate  of  interest  was  not 
fixed  by  the  law.  It  was  left  to  be  fixed  by  the  Secretary 
of  the  Treasury  and  the  persons  receiving  the  notes.  These 
notes  were  intended  to  be  circulated  as  money,  though  Con- 
gress had  not  the  boldness  to  make  them  such  in  plain 
words.  They  were  made  legal  tender  in  all  payments  to  the 
United  States,  and  were  willingly  received  by  the  people. 
Many  of  them  were  outstanding  in  1861. 

The  Fall  of  Gold. — B.  S.  Heath  says  : — In  1857,  in  his 
work  "  The  Fall  of  Gold,"  Chevalier  said  :  "  The  quantity 
of  gold  annually  thrown  on  the  general  market  approaches, 
in  round  numbers,  a  milliard  of  francs  ($200,000,000).  For 
along  series  of  years,  California  and  Australia  must  produce 
such  quantities  as  to  render  a  marked  decline  in  its  value 
inevitable.  It  is  absolutely  certain  that  a  production  so  vast 
should  be  accompanied  with  a  great  reduction  in  its  value. 
In  no  direction  can  a  new  outlet  be  seen,  sufficiently  large 
to  absorb  the  extraordinary  production  of  gold,  so  as  to  pre- 
vent a  fall  in  its  value.  Unless,  then,  we  possess  a  very 
robust  faith  in  the  immobility  of  human  affairs,  we  must  re- 
gard the  fall  in  the  value  of  gold  as  an  event  for  which  we 
should  prepare,  without  loss  of  time." 


OUR  MONEY  WARS.  95 

Under  this  and  similar  appeals,  from  different  parts  (if 
Europe,  by  the  money  and  creditor  class  (who  saw,  in  the 
near  future,  their  coin  and  their  securities  depreciating  in 
value,  relatively  as  the  poor  man's  labor  and  the  producer's 
wealth  increased,  through  the  increased  volume  of  money), 
Germany,  Austria  and  several  other  countries  demonetized 
gold. 

On  this  subject,  our  Congressional  monetary  commission 
says :  "  The  movement  in  Europe  for  the  general  demoneti- 
zation of  gold  would  have  become  general,  but  for  the  re- 
sistance of  France.  It  was  changed,  in  1865,  into  a  move- 
ment for  the  demonetization  of  silver.  But  this  change  from 
demonetizing  gold  to  demonetizing  silver,  was  more  of  form 
than  of  substance.  The  object  aimed  at  by  both  was  a 
disuse  of  one  of  the  money  metals — to  protect  the  creditor 
classes,  and  those  having  fixed  incomes  against  a  fall  in  the 
value  of  money,  and  arise  in  general  prices  of  labor  and  prop- 
erty. This  is  the  pith  and  the  marrow  of  the  monetary  dis- 
cussions of  the  past  twenty  years.  In  all  the  European  dis- 
cussions, after  1848,  and  prior  to  the  German  demonetization 
of  silver  and  its  consequences,  the  point  made  was  not  that 
either  metal  had  depreciated  relatively  to  the  other,  but  that, 
by  reason  of  extraordinary  supplies  of  gold  from  California 
and  Australia  about  1865,  and  by  new  supplies  of  silver  from 
Nevada,  both  metals  had  depreciated  relatively  to  commodi- 
ties, and  that  kings,  princes  and  office-holders,  having  fixed 
incomes,  and  the  creditor  class,  having  fixed  annuities, 
were  being  injured  by  a  rise  in  the  price  of  labor  and  com- 
modities." 

The  labor  and  producing  classes  were  getting  the  better 
of  the  idle,  non-taxed  and  non-producing  classes.  So  long 
as  the  double  standard  existed,  a  new  supply  of  either  metal 
was  an  addition  to  and  only  affected  the  general  mass  of 
money,  and  not  the  relative  value  of  the  metals.  The  "  fall 
in  gold,"  which  Chevalier  lamented  in  1S57,  was  its  fall  in 
relation  to  property.  In  order,  therefore,  to  protect  the  "  in- 
come classes,"  it  was  claimed  to  be  necessary  to  demonetize 
one  of  the  metals,  and  gold — being  the  metal  which  then 
promised  the  most  abundant  yield — was  selected  for  that 
purpose. 


96  OUR  MONEY  WARS. 

1860. 

The  War  Panic. — The  panic  and  crash  of  i860,  dur- 
ing which  over  6,000  business  failures  took  place,  was 
caused  by  the  loss  and  contraction  of  nearly  all  our  Western 
currency,  by  failure  of  banks  based  upon  Southern  State 
stocks.  After  the  Greenback  era  of  1862,  the  number  of 
failures  diminished,  with  the  increasing  of  the  currency ; 
and  when  contraction  began  in  1866,  the  failures  began  to 
increase  again,  and  kept  even  pace  with  such  contraction. 

The  State  bank  money  had  been  a  great  nuisance.  Be- 
sides its  inherent  weakness,  it  was  terribly  counterfeited. 
Some  idea  of  the  extent  of  the  evil  may  be  gained  by  ex- 
amining the  following  table,  taken  from  Shuckers'  "  Life 
of  Salmon  P.  Chase."  It  shows  the  monetary  condition  of 
the  United  States  in  1862  and  six  years  previous  : 

1856.  1862. 

Whole  number  of  banks i,4°9  I)5°° 

Number  whose  notes  were  not  counterfeited. .    463  253 

Number  of  kinds  of  imitations 1,462  1,861 

Number  of  kinds  of  alterations 1,119  3>°39 

Number  of  kinds  of  spurious 224  1,685 

The  Patient  Pack-mule — the  burden-bearer — the 
Treasury  note — is  now  trotted  out  again,  and  is  destined 
during  the  war  to  do  greater  service  than  any  Government 
money  ever  did  before.  The  Act  of  December  17,  i860, 
provides  for  the  issue  of  $10,000,000  Treasury  notes — to 
run  one  year,  and  bear  six  per  cent,  interest.  The  interest 
was  to  run,  and  the  notes  to  remain  out,  until  sixty  days 
after  notice  was  given  by  the  Secretary  of  the  Treasury  that 
he  was  ready  to  redeem  them.  They  were  to  be  paid  at  par 
to  the  public  creditors,  and  were  to  be  legal  tender  for  all 
debts  due  the  United  States.  Some  of  these  notes  were  to 
be  used  in  replacing  those  which  had  been  redeemed  and 
destroyed,  as  provided  for  in  the  Act  of  June  22,  i860. 

Stephen  Colwell,  of  Philadelphia,  spoke  thus  in  his  "  Ways 
and  Means  of  Payment,"  in  i860: — The  common  phrase 
that  our  bank  circulation  is  based  on  gold  and  silver  is  abso- 
lutely untrue.  If  our  paper  currency  had  no  other  basis  than 
this  very  uncertain,  insecure  and  ultimately  impossible  con- 
vertibility, it  could  not  be  upheld  for  a  week,  nor  even  a  day. 


OUR  MONEY  WARS.  97 

The  real  basis  of  our  paper  currency — that  which  does  sus- 
tain it  through  extraordinary  emergencies — is  the  individual 
promissory  notes  and  other  evidences  of  debt,  in  exchange 
for  which  it  is  issued.  These  must  all  be  paid,  or  the  debtor 
must  fail  or  suspend.  *  *  *  The  real  strength  of  the  banks  is 
in  this, — that  their  business  is  founded  on  the  trade  and  in- 
dustry of  the  country.  And  all  the  business  men,  with  all 
the  commodities  of  daily  consumption  in  their  hands,  are 
under  the  strongest  inducements  to  offer  these  commodities 
for  the  notes  and  deposits  of  the  bank.  *  *  *  The  obliga- 
tion to  pay  specie  on  demand  can  be  nothing  more  than  a 
check  on  the  abuse  of  banking,  or  a  security  to  the  public ; 
and  as  such  only  should  it  be  regarded  and  discussed.  If  it 
be  indispensable,  it  is  upon  the  ground  that  no  other  adequate 
security  is  attainable.  We  do  not  believe  this ;  and  regard 
this  attempt  to  place  the  credit  system  on  the  back  of  our 
coinage  system,  as  partaking  of  that  caution  and  wisdom 
which  should  place  a  locomotive  for  its  best  service  upon  a  one- 
horse  cart. 


As  we  are  approaching  the  time  of  war  bonds  and  cur- 
rency, when  we  were  dosed  with  15  kinds  of  money,  while 
the  plain  Treasury  note,  receivable  for  all  public  and  private 
debts,  would  have  been  infinitely  preferable,  I  will  give  a 
brief  advance  synopses  of  the  issues  ;  as  they  are  calculated 
to  puzzle  the  most  acute,  and  were  intended  to.  Let  it  be 
remembered  that  the  acts  mentioned  simply  "  authorized  " 
certain  issues.  In  many  cases  but  a  small  portion  of  that 
authorized  was  issued. 

Act  of  February  8,  1861.  A  six  per  cent.  20  year  loan  of 
$20,000,000. 

Act  of  March  2,  1861.  A  six  percent,  issue  of  $35,000,000 
Treasury  notes,  payable  in  three  years. 

Act  of  July  17,  1861.  For  $250,000,000  seven  per  cent. 
20  year  bonds.  Any  part  could  be  issued  in  three  year 
Treasury  notes  at  7.30  interest ;  or  non-interest  Demand 
notes,  or  one  year  Treasury  notes  at  3.65  interest,  exchange- 
able for  7.30  notes.  All  demand  notes  not  to  exceed 
$50,000,000. 

Act  of  August  5,   1861.     Issue    of    six  per  cent.  20   year 
bonds,  to  exchange  for  one  year  and  three  year  notes  at  any 
time. 
5 


98  OUR  MONEY  WARS. 

Act  of  February  25,  1862.  For  $500,000,000  six  per  cent, 
bonds  ;  the  5,20s.  Also  $150,000,000  Treasury  notes,  $50,- 
000,000  of  them  in  place  of  the  Demand  notes  of  July  17, 
r86i  ;  to  which  $10,000,000  was  added  by  Act  of  February 
12,  1862. 

Act  of  July  11,  1862.  For  $150,000,000  more  Treasury 
notes,  and  of  March  3,  1863,  $150,000,000  more,  making 
$450,000,000  in  all. 

Act  of  February  25,  1862.  For  $25,000,000  "deposits  "  at 
five  per  cent.  This  was  raised  to  $50,000,000  by  the  Act  of 
March  17,  1862,  and  to  $100,000,000  by  the  Act  of  July  11, 
1863  (January  30,  1864,  $50,000,000  added  at  6  per  cent.). 
All  this  called  "temporary  loans  "  was  to  be  repaid  on  ten 
days'  notice.     Was  mostly  funded  in  1865,  1866. 

Act  of  March  1,  1862.  For  one  year  debt  certificates  to 
creditors  at  six  per  cent.  These  were  issued  for  army 
supplies,  to  the  amount  of  $561,753,241,  and  all  but 
$4,000  was  funded  or  replaced  otherwise  in  1863,  1864 
and  1865. 

Act  of  July  17,  1862,  made  postage  legal  tender  in  sums 
less  than  $5.00. 

Act  of  March  3,  1863,  confirmed  June  30,  1864,  gave 
$50,000,000,  fractional  currency.  $46,000,000  was  out  January 

1,  1873- 

Act  of  March  3,  1863.  For  a  $900,000,000  loan  at  six  per 
cent,  for  10  to  40  years,  principal  and  interest  payable  i/i  coin. 
This  was  the  first  issue  of  anything  payable  in  coin  since  the 
Demand  notes.  That  the  people  generally  were  not  bother- 
ing about  coin  is  shown  by  the  fact  that  only  $75,000,000 
was  issued,  and  the  law  was  repealed  June  30,  1864.  The 
few  long-headed,  long-nosed  men  who  bought  them  paid, 
however,  a  premium  of  3V2  to  4  per  cent.  The  "orthodox" 
historians  say  :  "  A  preference  was  given  because  of  a  pos- 
sible distinction  existing  adverse  to  the  payment  of  the  5-20S 
in  coin." 

The  same  act  authorized  $400,000,000  of  one,  two  and 
three  year  Treasury  notes,  at  not  over  six  per  cent. — princi- 
pal and  interest  payable,  as  usual,  in  lawful  money.  There 
was  an  over-issue  of  these — in  all  they  were  $477,595,440, 
mostly  at  five  per  cent. 

The  same  act  authorized  the  issue  of  new  Treasury  notes 
for  any  of  these  issues  outstanding  at  any  time  and  badly 


OUR  MONEY  WARS. 


99 


worn,  and  provided  for  $150,000,000  more  of  non-interest 
notes  to  facilitate  the  exchange.  Treasury  notes  were  all  the 
vogue  in  1863. 

Act  of  March  2,  1864.  A  loan  of  $200,000,000  at  five  or 
six  per  cent,  principal  and  interest  in  coin.  These  10-40S  of 
1864  nearly  all  went  at  five  per  cent,  and  brought  from  one 
to  seven  per  cent,  premium. 

Act  of  June  30,  1864.  The  5-20S  of  1864  drew  six  per 
cent,  interest,  and  were  payable  in  lawful  money.  The  issue 
was  $125,561,300. 

The  same  act  authorized  $200,000,000,  7-30  Treasury 
notes  to  run  three  years  (Act  of  March  3,  1865  extended  this 
to  $600,000,000).  Of  these  7.30  interest-bearing  Treasury 
notes  $829,992,500  were  issued.  All  were  funded  before 
July  15,  1868." 

Act  of  March  3,  1865.  For  $600,000,000  six  per  cent, 
bonds  to  fund  Treasury  notes  and  other  obligations.  July 
1,  1865,  of  this  $322,998,950  was  issued,  and  November  1, 
$203,327,  250.     In  all  $526,326,200. 

By  authority  of  the  same  act  as  construed  by  the  Act  of 
April  12,  1866,  a  further  issue  was  made  in  July,  1867,  of 
$379,616,050  and  of  $42,539,350  on  July  1,  1868 — making 
$948,481,600  under  this  act.  They  are  called  "  consols  of 
1S65,  1S67  and  1868." 

Act  of  March  2,  1867,  $50,000,000  three  per  cent,  tempo- 
rary loan  certificates  of  deposit  were  authorized  to  redeem 
compound-interest  notes. 

Act  of  July  25,  1868,  authorized  $25,000,000  more.  Under 
these  Acts  $85,150,000  was  issued. 

The  Act  of  July  14,  1870,  provided  a  billion  and  a  half  re- 
funding bonds,  viz.  :  $200,000,000  five  per  cents.  $300,000,000 
four  and  a  half  per  cents,  and  $1,000,000,000  four  per  cents. 

They  were  30  year  bonds,  and  the  "  Credit  Strengthening 
Act  "  having  paved  the  way,  with  infernal  ingenuity,  were 
payable,  principal  and  interest,  in  coin.  As  silver  was  still  at 
three  per  cent,  premium  there  was  no  discussion  then  about 
gold.  But  187 1  was  to  see  the  beginning  of  the  plot  in  Europe 
to  break  silver  down. 

The-  Act  of  Jan.  20,  187 1,  increased  the  five  per  cents,  by 
$300,000,000,  interest  payable  quarterly. 

Act  of  July  12,  1882,  produced  $254,808,650  three  per 
cents. 


OUR  MONEY  WARS. 


CHAPTER  XII. 

1861  to  1866. 

WAR. 

1861. 

The  Act  of  February  8,  1861,  authorized  the  issue 
of  Treasury  notes,  or  a  loan  of  $25,000,000,  to  take  up 
Treasury  notes.  One  of  those  acts  that  leave  all  discretion 
to  the  Treasurer. 

The  Act  of  March  2,  186 1,  provides  for  a  loan  of 
$10,000,000  to  take  up  Treasury  notes  and  for  the  expenses 
of  the  Government.  If  the  bonds  could  not  be  sold,  then  the 
Treasury  notes  were  to  be  issued  and  relied  upon.  As  Jef- 
ferson says,  they  are  always  a  safe  reliance.  The  revenues 
of  the  Government,  excepting  those  required  to  support  the 
Government,  are  pledged  for  the  payment  of  the  bonds  and 
the  Treasury  notes.  If  bonds  were  sold,  they  are  to  be  re- 
deemable in  ten  and  payable  in  twenty  years. 

The  Yale  Hen  is  "  On  !  " — The  great  Civil  War  was  now 
begun,  and  the  nation  entered  upon  what  Sumner  of  Yale  (for 
once)  properly  describes  as  a  series  of  temporary  financial 
make-shifts.  This  weak  way  of  meeting  the  emergency  was 
caused  by  the  interference  of  such  men  as  Sumner  with  the 
wise  and  energetic  plans  of  such  true  leaders  as  Thaddeus 
Stevens  and  Henry  Wilson,  in  Congress.  If  Sumner  had 
lived  1,000  years  ago,  he  could  have  found  some  justification 
of  his  position.  He  even  doubted  the  need  of  paper-issues 
during  the  war.  Positively,  the  only  place  in  his  "  Cur- 
rency "  that  I  notice, in  which  this"  guardedly  conservative  " 
oracle  admits  the  possibility  of  paper  money  is  this  at  page 
196  :  "  The  economy  of  convertible  [mind  you,  not  inconverti- 
ble.— S.  L.]  paper  issues  is  assumed  and  repeated  by  many 
persons  who  have  never  taken  the  pains  to  analyze  that  econ- 
omy ;  to  see  wherein  it  consists,  and  how  great  it  is.  /  am 
liot prepared  to  take  total  abstinence  ground  against  paper  issues, 


OUR  MONEY  WARS.  ioi 

because  I  believe  that  they  can  be  made  useful,  and  eco- 
nomical ;  though  we  have  not  yet  learned  to  do  it."  When- 
ever the  Yale  pundit  has  hatched  out  this  egg,  we  will  doubt- 
less hear  him  cackle.  Until  then,  no  more  paper  issues  ! 
Let  the  world  stop  and  speak  in  whispers  ;  and  say,  with 
bated  breath,  "  Whist !     The  Yale  hen  is  on  !  " 

Immense  Issues  of  Money. — In  the  summer  of  1861,  the 
war  money  begins  to  assume  enormous  proportions.  The 
Act  of  July  17,  1861,  authorizes  a  loan  of  $250,000,000,  or 
the  issue  of  Treasury  notes  bearing  7-30  interest ;  or  if  bonds 
are  issued  they  are  to  be  at  seven  per  cent.,  redeemable  in 
twenty  years,  at  the  pleasure  of  the  Government.  This  act 
is  also  first  lo  provide  for  the  issue  of  Demand  notes,  payable 
in  coin,  of  a  denomination  of  not  loss  than  $10.  All  notes 
of  larger  denomination  than  $50  were  to  bear  interest.  The 
law  provides  that  these  notes  might  be  paid  to  Government 
employees  and  officials:  but  they  were  not  then  made  legal 
tender  for  duties.  The  banks  not  having  yet  suspended,  these 
notes  were  forced  by  the  banks  and  brokers  to  a  discount, 
though  they  were  payable  and  paid  in  coin,  when  coin  was 
demanded.  These  notes  were  receivable  for  bonds.  The 
bonds  were  redeemable  in  ten  years,  and  payable  in  twenty 
years. 

Seven-Thirties  and  Demand  Notes. — The  Act  of  August 
5,  1861,  provides  for  the  investment  of  7-30  notes,  which 
were  not,  under  these  acts,  legal  tender,  in  six  per  cent, 
bonds,  not  redeemable  until  20  years.  This  also  provides 
for  the  issue  of  Demand  notes  in  denominations  of  not  less 
than  $5,  to  the  extent  of  $50,000,000.  They  are  made  re- 
ceivable for  "  public  dues  ",  but  what  dues  are  not  stated. 
The  first  authority  to  issue"  them,  as  we  have  shown,  did  not 
specify  for  what  particular  payments  they  were  to  be  received. 
This  is  more  definite,  but  not  full.  But  as  the  law  suspends 
the  Act  of  1846,  so  as  to  allow  deposits  to  be  made  by  the 
Secretary  of  the  Treasury  in  banks,  it  was  construed  to  ex- 
clude these  Demand  notes  from  the  custom-house,  the  same 
as  bank  notes.  They,  therefore,  went  to  a  discount.  But 
when  the  Secretary  of  the  Treasury  ordered  them  received 
for  duties,  they  immediately  went  to  par  with  gold,  though 
they  were  not  by  law  legal  tender  at  that  time. 

The  above  suspension  of  the  Act  of  1846  was  engineered 
by  the  banks  for  their  special  benefit. 


OUR  MONEY  WARS. 


Warwick  Martin  says  :  "  Shylock's  conspiracy,  during  the 
war,  began  when  the  hanks,  in  1861,  tried  to  compel  the  re- 
tirement of  the  Demand  notes." 


The  New  York  banks  suspended  Dec.  31,  1861. 


Wm.  A.  Birkey,  in  his  valuable  book  "  The  Money  Ques- 
tion," says  of  the  Demand  notes  : — 

These  notes  were  receivable  for  all  public  dues,  duties  on 
imports  included,  and  were  subsequently  made  a  legal  tender 
for  private  debts  ,  and  the  result  was  that  they  commanded 
the  same  premium  over  the  ordinary  Greenback  that  gold 
did ;  and  went  up  with  gold,  step  by  step,  to  the  enormous 
premium  of  285  !  Could  any  better  evidence  than  this  be 
required,  to  prove  that  a  Greenback,  made  a  full  legal  tender, 
would  circulate  at  par,  or  nearly  so,  with  gold  ?  The 
Demand  notes  were,  of  course,  very  obnoxious  to  the  bull- 
ionists  :  because  they  gave  the  lie  to  all  their  theories  about 
paper  money  :  and  accordingly  they  were  got  out  of  the  way 
"at  the  earliest  moment  possible, — all  except  about  $75,000, 
which  are  probably  lost ;  and,  if  such  is  the  case,  constitute 
a  gain  of  that  amount  to  the  people  at  large. 

It  is  ever  memorable  that  these  notes  v  ere  not  at  par 
because  they  were  payable  in  coin;  but  for  the  reason  that 
they  were  receivable  for  duties  on  imports,  and  all  other 
debts  due  the  Government.  So  long  as  they  were  not 
so  receivable,  they  were  at  a  discount,  though,  payable  in 
coin. 

1862. 

Legal  Tenders  Now  First  Repudiated  by  Govern- 
ment.— Never  until  1862  was  the  power  of  the  Government 
to  make  its  own  paper  money,  or  that  of  the  banks,  legal 
tender  for  all  payments  to  the  United  States,  denied.  The 
evil  consequences  of  this  denial  and  prevention  have  been 
hideous.  

In  January,  1862.  Edward  Bates,  U.  S.  District  Attorney, 
delivered  this  opinion  : — The  Constitution  contains  restric- 
tions upon  States.  *  *  *  No  State  can  make  anything 
but  gold  and  silver  coin  a  tender  in  payment  of  debts.  This 
applies  to  a  State  only,  and  not  to  the  nation  ;  and  thus  it 


OUR  MONEY  WARS. 


103 


has  always  been  understood  with  regard  to  the  next  preced- 
ing clause  in  the  same  section — no  State  shall  "  emit  bills  of 
credit."  The  prohibition  to  emit  bills  of  credit  is  quite  as 
strong  as  the  prohibition  to  make  anything  but  gold  and 
silver  a  legal  tender ;  yet  nobody  doubts — Congress  does  not 
doubt  its  power  to  issue  bills  of  credit.  Treasury  notes  are 
bills  of  credit ,-  and  I  think  the  one  is  just  as  much  prohibited 
as  the  other — neither  is  forbidden  to  Congress. 


In  January,  1862,  the  banks  of  New  York,  Boston  and 
Philadelphia  combined  to  prevent  the  passage  of  the  Legal 
Tender  Act,  and  sent  delegates  to  Washington  for  that  pur- 
pose. 


Debates  were  hot  and  heavy  in  Congress  on  the  money 
question,  early  in  this  year.  Wm.  Fessenden  was  a  speci- 
men "  Conservative." 

After  arguing  that  the  war  would  be  over  by  the  end  of  the 
year,  he  proceeds  to  say,  in  a  special  argument  in  favor  of 
paying  the  interest  of  the  U.  S.  bonds  in  gold  :  "  We  shall 
have  a  heavy  capital  of  debt,  but  all  that  is  necessary  is  to 
secure  the  payment  of  the  interest.  A  public  creditor  looks 
not  for  the  principal.  *  *  *  He  wants  to  know  what  his  interest 
will  be.  The  example  of  England  proves  this  abundantly. 
Nobody  supposes  that  England  will  ever  pay  her  debts ; 
nobody  has  supposed  it  for  years  ;  and  yet  her  stocks  are 
always  sound,  and  are  sought  for  even  at  a  very  low  rate  of 
interest." 

This  is  the  high-toned  repudiator  who  was  afterwards  called 
to  be  Secretarv  of  the  Treasurv. 


For  a  time,  patriotism  prevailed.  A  full  legal-tender 
bill  passed  the  House  February  6,  1862.  The  vote  was  93 
to  59. 

The  full  legal-tender  bill  passed  the  Senate  February  12, 
1862.     The  vote  was  30  to  7. 

The  Act  of  February  12,  1862,  provides  $10,000,000 
additional  Demand  notes,  in  the  same  form  as  the  $50,000,000 
of  August  5,  1861.  Secretary  Chase  was  terribly  in  want  of 
money,  and  was  getting  behind  in  his  payments.  We  learn, 
from    Spaulding's    "  Financial    History   of   the   War,"   that 


104  OUR  MONEY  WARS. 

Chase  was   sending  pitiful  appeals  to  Congress,  to  hurry  up 
some  sort  of  a  big  issue  of  Treasury  notes. 


The  struggle  was  terrific.  On  February  20,  1862,  Thad- 
deus  Stevens — the  leader  of  the  money  reformers — uttered 
"  a  great  and  bitter  cry."  He  said  of  the  Senate  amend- 
ment, that  struck  out  the  legal-tender  clause  of  the  House 
bill :  "  I  have  a  melancholy  foreboding  that  we  are  about  to 
consummate  a  cunningly-devised  scheme,  which  will  carry 
great  injury  and  great  loss  to  all  classes  of  people  throughout 
this  Union.  *  *  *  There  was  a  doleful  sound  came  up  from 
the  caverns  of  the  bullion  brokers,  and  from  the  saloons  of  the 
associated  banks.  *  *  *  Jt  now  creates  money  ;  and  by  its 
very  terms  declares  it  a  depreciated  currency.  It  makes  two 
classes  of  money — one  for  banks  and  brokers — another  for 
the  people." 

On  his  deathbed  the  "Great  Commoner"  said;  "Yes,  we 
had  to  yield.  The  Senate  was  stubborn.  We  did  not  yield, 
however,  until  we  found  that  the  country  must  be  lost  or  the 
bankers  gratified ;  and  we  have  sought  to  save  the  country, 
in  spite  of  the  cupidity  of  its  wealthier  citizens."  Again  (he 
died  before  the  panic  of  1873):  "When,  a  few  years  hence, 
the  people  shall  have  been  brought  to  general  bankruptcy,  I 
shall  have  the  satisfaction  of  knowing  that  I  attempted  to 
prevent  it." 

Senator  Henry  Wilson  of  Massachusetts  said  :  "  I  venture 
to  express  the  opinion  that  99  out  of  every  100  of  the  loyal 
people  of  the  United  States  are  for  the  legal-tender  clause. 
I  do  not  believe  that  there  are  1,000  people  in  the  State  I 
represent  who  are  not  in  favor  of  it.  The  entire  business 
community,  with  hardly  a  single  exception, — men  who  have 
trusted  out  in  the  country,  in  commercial  transactions,  their 
tens  and  hundreds  of  millions. — are  for  the  bill  with  the 
legal-tender  clause.  Yes.  sir,  the  people. in  sentiment  ap- 
proach unanimity  on  this  question.  *  *  *  I  believe  that  no 
measure  that  can  be  passed  by  Congress,  unless  it  be  a  bill 
to  provide  revenue  to  support  the  Government,  will  be  re- 
ceived with  so  much  joy  as  the  passage  of  this  bill,  with  the 
legal-tender  clause.  In  my  judgment,  if  you  strike  out  the 
legal-tender  clause,  you  will  have  every  curbstone  broker  in  the 
country,  the  bulls  and  bears  of  the  Stock  Exchange,  and  all 
that  class   of  men  who  fatten   on  public   calamity  and  the 


OUR  MONEY  WARS. 


•o$ 


wants  and  necessities  of  the  people,  using  all  their  influence 
to  depreciate  the  credit  of  this  Government,  and  break  down 
the  value  of  the  Demand  notes.  *  *  *  I  have  received  sev- 
eral letters  from  my  own  State  on  the  subject, — one,  a  day  or 
two  ago,  signed  by  several  large  commercial  houses,  repre- 
senting millions  of  capital, — and  from  others;  and  they  say 
to  me  that  they  do  not  know  a  merchant  in  the  city  of  Boston, 
engaged  in  active  business,  who  is  not  in  favor  of  the  legal- 
tender  clause." 

That  extraordinary  man,  E.  G.  Spaulding,  was  like  John 
Sherman,  a  true  Greenbacker  at  first.  Indeed,  he  originated 
the  Greenback  and  the  five-twenty.  But  he  was  seduced,  or 
rather  overborne,  by  the  money-power.  Like  many  another, 
he  saw,  after  a  hard  fight  for  true  money,  that  he  would  have 
to  give  it  up,  or  retire  from  public  life,  and  the  prospect  of 
wealth.  So  he  went  with  the  tide — heroes  and  martyrs  are 
scarce  now.     He  said  at  this  time  in  Congress  : — 

Congress  may  decide  whether  it  will  authorize  the  Secre- 
tary of  the  Treasury  to  issue  demand  Treasury  notes, — and 
make  them  a  legal-tender  in  payment  of  debts, — or  whether  it 
will  put  its  six  or  seven  per  cent,  bond  on  the  market,  at  ruin- 
ous rates  of  discount,  and  raise  the  money  at  any  sacrifice  the 
money-lender  may  require,  to  meet  the  pressing  demands 
upon  the  Treasury.  In  the  one  case,  the  Government  will 
be  able  to  pay  its  debts  at  fair  rates  of  interest ;  in  the  other 
it  must  go  into  the  streets  shinning  for  the  means,  like  an 
individual  in  failing  circumstances ;  and  sure  of  being  used 
up,  in  the  end,  by  the  avarice  of  those  who  exact  unreason- 
able terms.  But,  sir,  knowing  the  power  of  money,  and  the 
disposition  there  is  among  men  to  use  it  for  the  acquisition 
of  greater  gain,  1  am  unwilling  that  this  Government,  with 
all  its  immense  power  and  resources,  should  be  left  in  the 
hands  of  any  class  of  men,  bankers  or  money-lenders,  how- 
ever respectable  and  patriotic  they  may  be.  The  Govern- 
ment is  much  stronger  than  any  of  them.  Its  capital  is  much 
greater.  It  has  control  of  all  the  bankers'  money,  and  all 
the  brokers'  money,  and  all  the  property  of  the  30  millions 
of  people  under  its  jurisdiction.  Why,  then,  should  it  go 
into  Wall  Street,  State  Street,  Chestnut  Street,  or  any  other 
street,  begging  for  money  ?  Their  money  is  not  as  secure 
as  Government  money.  All  the  gold  they  possess  would  not 
carry  on  the  Government  for  90  days.     They  issue  only  prom- 


106  OUR  MONEY  WARS. 

ises  to  pay,  which,  if  Congress  does  its  duty,  are  not  half 
as  secure  as  United  States  Treasury  notes,  based  on  ade- 
quate taxation  upon  all  the  property  of  the  country. 


After  his  back-down,  Spaulding  sang  a  different  song.  He 
saw  that  if  he  remained  an  honest  reformer,  and  did  not 
swing  with  the  tide,  he  must  "  have  nothing  and  be  nothing." 

So  he  went  with  the  tide  ! 

And  said  that  the  Greenback  must  go  ! 

What  a  change  occurs  !  He  eulogizes  the  legal  tender ; 
but  revels  in  the  prospect  that  the  Greenbacks  will  soon  be 
withdrawn,  and  their  places  taken  by  the  National  bank  cir- 
culation ;  argues  the  superiority  of  the  latter  over  the 
former  because,  while  the  Greenbacks  were  only  backed  by 
the  responsibility  of  the  nation,  the  National  bank  notes  will 
have  the  additional  guarantee  of  the  banks  !    ■ 

With  the  most  charming  naivete  he  says  :  "  Legal  tender 
notes  issued  direct  from  the  Treasury  constitute  a  loan  to 
the  Government,  without  interest.  Bank  notes,  under  this 
bill,  would  be  loaned  to  the  Government  and  the  people  at 
six  and  seven  per  cent,  interest.  We  give  to  the  banking 
associations  the  interest  on  the  National  currency  (354 
million)  issued  by  them,  as  an  inducement  for  them  to  form 
associations,  and  be  liable  for  its  redemption." 

The  Mutilated  Legal-Tender  Act  was  Finally  Passed, 
February  25,  1862. — This  is  the  first  legal-tender  act.  It 
provides  for  the  issue  of  $150,000,000  legal-tender  notes, 
$50,000,000  of  which  were  to  be  used  to  redeem  $50,000,000 
Demand  notes,  which  were  then  at  a  discount.  The  issues 
under  this  act  were  made  legal  tender  to  the  Government 
and  the  people  for  everything  "  excepting  duties  on  imports 
and  interest  on  the  public  debt."  Had  they  been  made  legal 
tender  for  everything,  they  would  never  have  been  at  a  dis- 
count. This  would  have  saved  $1,000,000,000  to  the  public. 
These  notes,  under  this  law,  were  made  receivable  for 
"  bonds  the  same  as  coin.'"  The  bonds  issued  under  this  act 
were  to  be  5-20  bonds — redeemable  in  five  and  payable  in 
20  years,  in  lawful  money,  meaning  legal-tender  notes.  This 
act  also  provided  that  the  Government  shall  receive  de- 
posits of  sums  of  $100  and  over  ;  and  shall  give  convertible 
receipts  or  certificates  for  this  money.  And  after  ten  days' 
notice   the   holders   of   the   certificates   could   receive   this 


OUR  MONEY  WARS.  107 

money,  principal  and  interest.  The  amount  to  be  thus  re- 
ceived on  deposit  was  $25,000,000  only,  under  this  act.  The 
limit  was  soon  full.  The  certificates  were  as  good  as  money 
when  held  by  the  people ;  and  the  Government  had  the  use 
of  the  money  in  time  of  need.  The  rate  of  interest  should 
have  been  only  three  per  cent.,  instead  of  five.  Duties  on 
imports  were  to  be  paid  in  coin  and  Demand  notes,  as  pro- 
vided in  this  act.  The  coin  was  to  pay  interest  on  bonds  or 
on  interest  notes,  and  used  to  reduce  the  bonded  debt  one 
per  cent,  per  annum.  The  balance  was  to  be  carried  into 
the  Treasury. 

February  25th,  1862,  was  a  very  important  day  for  the 
United  States.  We  give  here  an  allegorical  description  of 
some  of  the  results  of  that  day's  botched  work. 

B.  S.  Heath,  the  author  of  "The  Labor  and  Finance 
Revolution,"  who  was  editor  of  the  Chicago  Express,  at  the 
time  of  his  death,  had  a  very  lively  and  spicy  style.  Several 
extracts  from  his  book  will  be  found  in  this  work.  The  fol- 
lowing specimen  will  illustrate  his  peculiar  style  : — 

The  Great  National  Bear: — It  is  related  that  in  the 
Canton  of  Berne,  in  Switzerland,  it  had  been  customary, 
from  time  immemorial,  to  keep  a  bear  at  public  expense ; 
and  the  people  had  been  taught  to  believe  that  if  they  had 
not  a  bear  on  hand  they  would  be  undone,  and  the  country 
would  go  to  wreck  and  ruin.  So  they  endured  the  bear,  not- 
withstanding the  expense,  and  the  fatal  injury  that  be  in- 
flicted upon  pigs  and  children  that  happened  to  step  over 
the  line  of  his  jurisdiction.  It  happened  one  day  that  bruin 
sickened  and  died,  too  suddenly  to  have  his  place  immedi- 
ately supplied  with  another.  During  the  interval,  the 
people  were  amazed  and  delighted  to  see  that  the  sun  con- 
tinued to  shine,  the  corn  to  grow,  and  the  vintage  to  flour- 
ish ;  and  everything  went  on  the  same  as  before — saving  the 
danger  and  expense  of  the  bear.  So  they  came  to  the 
sensible  conclusion  not  to  keep  any  more  bears. 

With  no  more  sense,  and  at  much  greater  expense,  the 
civilized  world  has  been  harboring  and  keeping  a  bear  for 
the  last  2,000  years.  Every  civilized  nation  has  had  its 
bear.  '  Our  Revolutionary  fathers  repulsed  the  British  lion, 
but  accepted  the  embrace  of  the  English  bear — specie-basis. 
It  has  been  an  expensive  and  dangerous  beast  to  keep.  In 
1809,  its  depredations  occasioned  great  public  distress ;  and 


108  OUR  MONEY  WARS. 

in  several  instances  involved  the  entire  country  in  bank- 
ruptcy and  ruin,  from  which  it  took  years  to  recover.  In 
1814,  1819,  1825,  and  at  other  periods,  the  beast  got  on  his 
periodical  rampage  producing  the  most  terrible  and  disas- 
trous results.  But  the  bear  must  be  kept,  or  we,  like  the 
peasants  of  Berne,  would  be  undone.  He  was  the  idol  of 
civilization.  To  him  society  offered  up  its  sacrifices,  with 
the  same  devotion  that  the  Hindoo  mothers  yield  up  their 
babes  to  the  crocodiles  of  the  Ganges. 

One  day  he  sickened  and  died.  It  was  on  February  25, 
1862.  Devout  worshipers  from  Boston,  New  York  and 
Philadelphia  flocked  to  Washington,  to  weep  and  howl  over 
his  untimely  death.  They  were  frantic  and  inconsolable. 
They  feared  the  sun  would  cease  to  shine,  the  crops  to  grow, 
or  the  tide  to  ebb  and  flow.  But  time  passed  on.  The  sun 
kept  its  course.  The  seasons  came  and  went,  just  as  of  old. 
People  prospered,  as  they  never  had  before.  Men  grew  rich. 
Labor  was  fully  employed,  well-paid  and  not  molested. 
Civilization  extended,  and  the  wilderness  disappeared.  The 
rose  blossomed  where  the  tangle-bush  had  grown.  Railroads 
spanned  the  unknown  waste.  The  march  of  improvement 
kept  time  to  the  music  of  machinery  and  the  hum  of  in- 
dustry. There  was  no  bear  to  molest  or  make  afraid.  Still, 
idolatry,  like  the  old  man  of  the  sea,  clung  to  the  public 
mind.  Men  could  not  believe  that  prosperity  without  gold 
could  be  real.  They  prayed  for  the  return  of  their  idol,  and 
warned  society  that  for  all  its  seeming  prosperity,  and 
delusive  dreams  of  wealth,  corresponding  sacrifices  must  be 
made  to  their  idol,  or  the  country  would  be  a  howling  bed- 
lam of  madmen  and  fanatics. 

So,  on  April  12,  1866,  keeper  McCulloch  was  ordered  to 
begin  negotiations  for  a  bear.  Immense  sacrifices  of  men 
and  property  followed.  The  next  year  2,000  men  fell,  and 
over  $80,000,000  were  lost.  Each  succeeding  year  the  num- 
ber of  human  sacrifices  increased,  and  the  amount  of 
pecuniary  loss  augmented,  until  the  reinstatement  of  the 
beast  in  1879  ;  10.000  men  and  firms  having  fallen  and 
$300,000,000  of  wealth  being  sacrificed  in  the  previous  year. 
Now  we  have  our  blood-thirsty  god  reinstated,  and  John 
Sherman  as  high  priest.  [He  should  have  added  that  the 
victims  were  numbered  by  millions,  and  the  losses  by  annual 
billions,  through  the  general  stoppage  of  industries. — S.  L.] 


OUR  MONEY  WARS.  109 

"The  Origin  and  History  of  Five-Twenty  Bonds," 
Act  February  25,  1862,  is  given  at  length  by  John  G.  Drew, 
in  his  "  Money  Muss."  He  shows  how,  after  Mr.  Spaulding 
had,  on  January  7,  1862,  reported  a  bill  for  $100,000,000  full 
legal-tender  Greenbacks  ;  and  Attorney  General  Bates  had  en 
dorsed  their  constitutionality,  the  money  monopolists  "  felt  the 
same  solicitude  as  to  the  profits  resulting  from  'measures  of 
value '  as  you  would  for  your  monopoly  of  the  pint-pot,  if 
you  owned  the  only  one  existing;  and  you  learned  that  it 
was  the  intention  of  Government  to  multiply  such  measures 
to  such  extent  as  the  requirements  of  the  community  might 
indicate."  He  describes  the  delegation  of  bankers,  and 
how  they  seduced  Mr.  Chase,  and  shows  how  the  Com- 
mittee of  Ways  and  Means — E.  G.  Spaulding,  Samuel 
Hooper  and  Erastus  Corning — opposed  them,  and  re- 
ported the  original  bill  240,  for  the  issuance  of  Greenbacks 
and  funding  them  in  5-20 s.  A  large  quotation  from  Mr. 
Drew's  book  will  be  found  at  the  date  when  Grant  signed 
the  bill  that  made  the  5-20S.  payable  in  coin. 

Spaulding's  History  [1869]  thus  describes  the  certificates 
authorized  February  25,  1862  :  "  They  were  to  be  issued  to 
creditors,  in  sums  under  $1,000,  payable  in  one  year  at  six 
per  cent.  And,  by  Act  of  March  17,  this  power  was  en- 
larged, so  as  to  embrace  checks  drawn  in  favor  of  creditors 
by  disbursing  officers,  upon  sums  placed  to  their  credit  in 
the  books  of  the  Treasury.  The  power  thus  conferred  upon 
the  Secretary  of  the  Treasury,  to  issue  certificates,  was  broad 
and  unlimited. 

"  The  certificates  issued  under  these  acts  were  in  the  simili- 
tude of  bank-notes,  fitted  for  circulation  as  money,  and  did 
circulate  to  a  considerable  extent  as  currency,  until  there 
was  such  an  accumulation  of  interest  upon  them  as  to  make 
it  an  object  for  capitalists  to  hold  them  as  an  investment. 

"  The  Secretary  began  issuing  certificates  simultaneously 
with  the  issue  of  Greenbacks,  and  continued  to  issue  them, 
in  large  amounts,  during  the  progress  of  the  war.  This  was 
advantageous  to  the  Government,  but  was,  at  the  same  time, 
another  fruitful  source  of  inflation,  and  operated  directly 
against  any  considerable  funding  in  the  long  5-20  bonds." 

Loan  Certificates. — The  Act  of  March  12,  1862,  pro- 
vides for  the  issue  of  $50,000,000  additional  temporary  loan 
certificates,  which  would  be  redeemed  in  legal-tender'  notes 


no  OUR  MONEY  WARS. 

upon  te-n  days'  notice.  Why  not  issue  the  legal-tender  notes 
in  place  of  the  certificates,  and  save  the  interest  ?  If  these 
certificates  were  not  presented  for  one  year,  they -were  to 
bear  six  per  cent,  interest.  They  were  to  be  paid  out  to 
public  creditors.  Why  not  pay  out  the  legal-tender  notes  to 
said  creditors  ?  Well,  the  American  public  was  being  thus 
gradually,  painfully  and  expensively  educated  by  fifteen 
kinds  of  paper  money  up  to  an  understanding  and  appre- 
ciation of  fiat  money.  The  process  is  slow.  A  majority 
believe  in  it  now;  but  they  have  not  the  spunk  to  vote 
for  it. 

Demand  Notes  Full  Legal  Tender. — An  Act  of- March 
17,  1862,  made  the  Demand  notes  legal  tender  for  every- 
thing— which  they  had  never  previously  been.  The  Secre- 
tary of  the  Treasury  was  ordered  to  reissue  Demand  and 
legal-tender  notes  upon  their  coming  into  the  Treasury.  He 
was  to  exchange  new  for  old  and  defaced  notes.  The  old 
ones  were  to  be  destroyed. 

The  Hazzard  Circular. — An  apparently  authentic  cir- 
cular of  the  summer  of  1862  has  long  been  kept  in  print  and 
"in  stock  "by  the  labor  and  money  reform  papers.  It  is 
called  "The  Hazzard  Circular,"  and  is  thus  described :  In 
the  summer  of  1862  the  money  monopolists  of  London  saw 
an  opportunity  to  extend  their  system  to  this  country,  and 
accordingly  embodied  their  scheme  in  a  "  confidential  "  cir- 
cular, and  commissioned  one  Hazzard,  a  London  banker,  to 
propagate  it  among  the  American  bankers,  with  a  view  to 
having  the  finance  legislation  of  Congress  pave  the  way  for 
its  final  adoption  as  the  settled  policy  of  the  nation.  Here 
it  is  :  "  Slavery  is  likely  to  be  abolished  by  the  war  power, 
and  chattel  slavery  to  be  destroyed.  This,  I  and  my  -Euro- 
pean friends  are  in  favor  of.  For  slavery  is  but  the  owning 
of  labor,  and  carries  with  it  the  care  for  the  laborer,  while 
our  plan  is  for  capital  to  control  labor  by  controlling  wages. 
This  can  only  be  done  by  controlling  the  money. 

"  The  great  debt  that  capital  will  see  to  it  is  made  out  of 
this  war,  must  be  used  as  the  means  to  control  the  volume 
of  money.  To  accomplish  this,  the  debt  must  be  bonded, 
and  the  bonds  must  be  used  as  the  banking  basis. 

"  We  are  now  waiting  to  get  the  Secretary  of  the  Treasury 
to  make  the  recommendation  to  Congress.  It  will  not  do  to 
allow  the  Greenbacks  to  circulate  as  money  for  any  length  of 


OUR  MONEY  WARS.  m 

time;  for  we  cannot  control    them,    but  we   can   control   the 
bonds,  and  through  them  the  bank  issues." 


July  i,  1862,  B.  S.  Heath,  in  "  Labor  and  Finance,"  gives  as 
already  issued  of  Seven-thirties,  $123,000,000,  and  of  Green- 
backs, $151,000,000,  and  of  temporary  ten-day  loans  and 
one-year  certificates  of  indebtedness,  $108,000,000. 

Postage  Legal  Tender. — The  Act  of  July  17,  1862, 
makes  postage  stamps  legal-tender  money  for  $5,  and  re- 
deemable in  legal-tender  notes,  in  sums  of  $3  and  upward. 
They  were  to  be  sold  by  Government  officials  for  legal-tender 
notes  at  par.  This  act  also  provides  that  after  August  1, 
1862,  no  bank,  corporation  or  individual  should  issue  any 
note  to  circulate  as  money  under  one  dollar,  upon  pain  of 
fine  or  imprisonment. 

Large  and  Small  Greenbacks. — Several  writers  give  the 
issue  of  $150,000,000  legal-tender  notes  as  under  an  Act  of 
July  n.     Martin  gives  it  thus  : — 

Act  of  August  5,  1862  (Statutes  12,  p.  532).  This  law 
authorized  the  issue  of  $150,000,000  legal-tender  notes,  of  the 
same  character  as  the  first  issue,  which  were. to  be  received 
for  bonds  ;  and  also  authorized  the  issue  of  bonds  which  were 
payable  in  legal  tenders.  This  issue  added  to  the  first 
made  $300  000,000.  Had  these  notes  been  made  full  legal 
tender,  and  issued  up  to  $1,000,000,000,  they  would  have 
been  always  at  par  with  coin,  and  our  debt  would  have  been 
small. 

$35,000,000  of  this  issue  was  in  small  notes — a  very  im- 
portant and  desirable  act. 


And  now  gold  was  going  up.     In  October  it  reached  $1.33. 

Who  Bought  the  Five-Twenties. — W.  A.  Birkey,  in  his 
"  Money  Question,"  gives  this  testimony  about  Hugh  Mc- 
Culloch  and  the  5-20S.  : — 

McCulloch  bears  testimony  as  to  what  class  of  people  took 
the  5-20  bonds.  In  a  letter  to  the  N.  Y.  Tribune,  dated  at 
London,  in  September,  1875,  he  said:  "I  recollect  the  time 
when  subscribers  for  U.  S.  bonds  were  regarded  as  patriots  ; 
and  I '  happen  to  know  to  what  class  they  belonged.  With 
rare  exceptions,  they  were  not  capitalists.*  *  *  The  purchasers 
of  our  bonds  were  the  patriotic  men  and  women  of  all  parties  ; 
chiefly  men  of  moderate  means ;  who  were  resolved  that  the 


H2  O  UR  MONE  Y  U  'A  A'S. 

Union  should  be  saved,  no  matter  at  what  cost  of  money  or 
blood." 

It  may  be  interesting  to  state  that  McCulloch  was  not  one 
of  those  who  were  resolved  that  the  Union  should  be  saved, 
no  matter  at  what  cost,  etc.  At  that  time  he  was  a  country 
banker,  "  of  moderate  means,"  somewhere  in  the  State  of 
Indiana  ;  and  was  solicited,  we  believe  by  the  Sub-Treasurer 
of  the  United  States,  Mr.  Cisco,  to  have  his  bank  take  and 
dispose  of  some  of  "  our  bonds."  He  treated  the  request 
with  contempt.  This  matter  was  so  well  known  at  the  time 
of  his  appointment,  as  Secretary  of  the  Treasury,  as  to  be 
talked  of  on  the  streets  of  Washington  ;  and  was  hushed  up 
by  his  friends,  only  with  great  difficulty. 

The  following  item,  as  to  a  later  date,  throws  a  lurid  light 
upon  Mac's  patriotism  :  "  Judge  Strong's  decision  in  the  case 
of  the  United  States  against  Edwin  R.  Lewis,  trustee  for  the 
creditors  of  Jay  Cooke  &  Co.,  draws  attention  afresh  to  the 
transactions  between  Secor  Robeson  and  McCulloch.  The 
London  house  of  Jay  Cooke,  McCulloch  &  Co.  appears  to 
have  been  set  up  on  public  funds  advanced  by  Robeson  ;  and 
is  admitted  to  have  depended  for  its  continuance  on  addi- 
tional deposits  by  him,  amounting  to  at  least  $1,200,000; 
against  which  iron  rails  worth  about  half  that  amount  were 
hypothecated." 

1863. 

Spaulding  says  that  up  to  January  12,  1863,  only  $25,000.- 
000  Five-twenties  had  been  sold  ;  because  Greenbacks  were 
still  scarce,  and  the  people  did  not  want  to  part  with  them. 

National  Banks  Authorized. — The  Act  of  February  2-, 
1863,  authorizes  the  National  banking  system  now  in  exist- 
ence. The  bill  was  introduced  by  Senator  Sherman,  who 
assigns  reasons  why  the  notes  of  these  banks  should  take  the 
place  of  legal  tender  notes.  He  said  that  the  latter  should 
and  would  be  all  destroyed.  His  reasoning  was  fallacious, 
and  time  has  shown  his  conclusions  false. 

The  status  of  the  National  bank  note  is  shown  by  its  in- 
scriptions. At  the  top  is  this:  "This  note  is  secured  by 
bonds  of  the  United  States  deposited  with  the  U.  S.  Treasurer 
at  Washington."  At  the  center  is  this  :  "  First  N.  bank  of 
will  pay  dollars  to  bearer  on  demand."     On 

the  back  is  :   "  This  note  is  receivable  at  par  in   all  parts  of 


OUR  MONEY  WARS.  113 

the  United  States  in  payment  of  all  taxes  and  excises  and 
other  dues  to  the  United  States,  except  duties  on  imports. 
And  also  for  all  salaries  and  other  debts  and  demands  owing 
by  the  United  States  to  individuals,  corporations  and  associ- 
ations within  the  United  States,  except  interest  on  the  public 
debt." 

Here  are  Sherman's  words  in  the  Senate  when  introducing 
the  National  Bank  bill : 

"  Another  objection  is,  that  they  can  only  be  used  during 
the  war.  The  very  moment  that  peace  comes,  all  this  circu- 
lation that  now  fills  the  channels  of  commercial  operations 
will  be  at  once  banished  ;  they  will  be  converted  into  bonds; 
and  then  the  contraction  of  prices  will  be  as  rapid  as  the  in- 
flation has  been.  The  issue  of  Government  notes  can  only 
be  a  temporary  measure,  and  is  only  intended  as  a  tempo- 
rary measure  to  provide  for  a  national  exigency.  *  *  *  But 
it  is  asked,  why  look  at  all  to  the  interests  of  the  banks  ;  why 
not  directly  issue  the  notes  of  the  Government,  and  thus  save 
the  people  the  interest  on  the  debt  represented  by  the  notes 
in  circulation  ?  The  only  answer  to  this  question  is  that  his- 
tory teaches  us  that  the  public  faith  of  the  nation  alone  is 
not  sufficient  to  maintain  a  paper  currency.  There  must  be 
a  combination  between  the  interests  of  private  individuals 
and  the  Government."     Which  is  all  false. 

The  Law  allowing  the  Interior  Banks  to  keep  Large 
Amounts  of  their  Reserves  in  so-called  Redemption 
Banks,  or  Banks  in  Money  Centers. — The  National  banks 
in  money  centers  are  under  great  obligations  to  Mr.  Sherman 
for  putting  this  provision  in  the  National  Bank  Act,  as  it 
afforded  these  banks  the  means  of  using  larger  sums  of  money 
which  did  not  belong  to  them.  It  was  used  in  making  call 
loans  to  speculators  in  bonds,  gold,  and  stocks.  The  coun- 
try banks  are  also  under  obligation  to  Mr.  Sherman  for  allow- 
ing these  banks  in  the  money  centers  to  pay  them  interest  for 
the  money  thus  kept  by  them.  But  the  people  of  the  interior 
had  a  right  to  complain  that  the  money  kept  by  their  banks 
with  banks  in  the  money  centers  was  thus  withdrawn  from 
the  locality  where  it  was  needed  in  business  :  and  kept  where 
it  was  not  needed,  and  could  not  be  used  to  benefit  the 
country  ;  but  where  it  was  used  for  speculative  transactions 
only,  to  the  derangement  and  injury  of  business  generally. 
This   law  was  wholly  in  the   interest  of  banks  and  bankers, 


U4 


OUR  MOXEY  WARS. 


and  against  the  interests  of  the  people  generally.  What  won- 
der that  now,  in  1890,  the  South  is  clamoring  for  State  banks. 
The  poorer  money  the  notes  of  these  banks  are  the  surer 
they  are  to  stay  at  home  !     Any  money  is  better  than  none. 

Spaulding  gives  the  vote  on  the  National  Bank  bill  thus : 
Senate,  yeas  23,  nays  21 ;  House,  yeas  78,  nays  64.  A  close 
shave. 

The  Ten-Forties,  Fractional  Currency,  etc.— Spauld- 
ing gives  this  synopsis  of  the  Ten-forty  Act  of  March  3,  1863  : 
The  first  section  authorized  a  loan  of  $300,000,000  for  the 
then  current  year;  and  $600,000,000  for  the  then  next  fiscal 
year  ;  and  to  issue  bonds  therefor,  at  not  less  than  ten  nor  more 
than  forty  years,  at  not  exceeding  six  per  cent,  in  coin  :  not 
exceeding,  in  all,  $900,000,000.  2.  By  sec.  2,  of  the  same 
act,  the  Secretary,  in  lieu  of  an  equal  amount  of  said  bonds, 
was  authorized  to  issue  $400,000,000  of  Treasury  notes,  bear- 
ing interest  not  exceeding  six  per  cent,  payable  in  lawful 
money ;  which  notes,  payable  in  periods  expressed  on  their 
face,  might  be  made  a  legal  tender  at  their  face  value.  3.  By 
the  third  section  $150,000,000  in  amount  of  U.  S.  notes,  made 
a  legal  tender,  might  be  issued.  The  restriction  in  the  sale 
of  bonds  to  market  value  was  repealed.  And  the  holders  of 
U.  S.  notes,  under  former  acts,  shall  present  the  same  for  the 
purpose  of  exchanging  them  for  bonds  as  therein  provided, 
on  or  before  July  1,  1863  ;  and  thereafter  the  right  to  ex- 
change the  same  shall  cease  and  determine.  7.  This  section 
imposed  a  tax  of  one  per  cent,  each  half  year,  on  a  graduated 
scale  of  State  bank  circulation  ;  according  to  the  capital  stock 
of  each  bank. 

I  give  this  statement  from  Spaulding  (who  had  become  at 
the  time  of  writing  an  enemy  of  Greenbacks  and  a  friend  of 
bank  issues  and  bonds)  as  a  preface  to  what  certain  friends 
of  Greenbacks  say. 

Judge  Warwick  Martin  says  : — 

The  Act  of  March  3,  1863,  is  dated  six  days  after  the  first 
National  Bank  Act  was  approved.  It  was  intended  to  carry 
out  Sherman's  intention  to  retire  the  legal  tenders.  To  do 
this  the  following  points  had  to  be  covered  :  (1)  Six  per 
cent,  bonds  must  be  supplied  in  such  excess  as  would  make 
them  dull  and  cheap  for  bank  investment.  So  900  million 
10-40S  were  issued,  purchasable  with  legal  tenders — bonds 
and  interest  payable  in  coin.     Interest  on  these  above  $100 


OUR  MONEY  WARS. 


I55 


payable  semi-annually — under  that  annually ;  thus  giving 
preference  to  big  buyers.  (2)  State  bank  and  legal  tenders 
and  Demand  notes  must  be  squelched.  So  (a)  State  bank 
notes  were  taxed  ten  per  cent,  per  annum,  which  drove  them 
to  turn  to  Nationals,  (b)  Legal  tenders  were  to  be  refused 
for  bonds  after  July  1,  1863.  This  rushed  the  legal  tenders 
into  the  Treasury — the  people  fearing  their  repudiation. 
They  were  not  so  received  again  until  1865.  This  hit  them 
hard,  and  they  went  down  to  $2.85  to  $1  gold.  But  money 
wis  needed  to  pay  the  soldiers,  at  the  end  of  the  war-,  and 
they  demanded  Greenbacks.  So  the  law  was  repealed — that 
bunds  might  be  bought  with  Greenbacks  to  supply  means  of 
payment.  This  wns  one  of  the  darkest  acts  of  our  history. 
Wall  Street  made  fortunes  out  of  it,  by  purchasing  the  legal- 
tender  notes  and  holding  them  ;  and  investing  in  bonds  at 
$40  in  the  $100  for  gold,  as  soon  as  they  were  again  receiv- 
able, (c)  Fearing  the  people  would  still  not  buy  the  bonds, 
Sherman  provided  in  the  act  for  400  million  three-years  six 
per  cent,  notes,  payable  in  legal  tenders  and  themselves  full 
legal  tenders.  If  these  were  issued  only  500  million  bonds 
were  to  come  out.  The  latter  would  give  a  basis  for  National 
banks — the  former  would  redeem  the  legal  tenders,  and  then 
be  funded.  A  cunning  scheme  ;  but  it  failed.  The  people 
clung  to  the  legal-tender  Greenbacks.  Sherman  showed  his 
crafty  hand  in  the  section  of  the  act  demonetizing  the  legal 
tenders, — just  as  he  did  later,  in  the  act  demonetizing 
silver.  In  both  cases,  it  takes  a  Philadelphia  lawyer  to  see 
the  trick. 

To  insure  the  reception  of  the  three-years  notes,  they  were 
made  convertible  into  legal  tenders  ;  and  to  cover  this  scheme, 
the  act  authorizes  150  million  more  legal  tenders  to  redeem 
three*-years  notes  when  presented ;  but  not  to  be  issued  for 
any  other  purpose. 

The  act  also  provides,  on  a  large  scale,  for  the  issue  of  in- 
terest certificates  for  temporary  loans.  All  the  laws  passed 
at  this  time  sought  to  convert  the  non-interest  debt  of  the 
nation — which  was  used  as  money — into  an  interest-bearing 
debt.     So  the  suffering  people  were  loaded  up. 

One  .redeeming  feature  of  the  act  gave  us  50  million  frac- 
tional currency.  But  the  same  crafty  hand  pulled  that  in, 
January,  1875  ;  and  substituted  silver,  at  an  annual  cost  of 


u6  OUR  MONEY  WARS. 

$2,500,000  ;  to  the  disgust  of  the  people,  and  the  profit  of  the 
five  per  cent,  bondholders. 

Tricks  that  were  Not  Vain. — A  very  brief  and  pointed 
epitome  of  the  financial  scull-duggery  of  this  year  is  given 
in  this  extract  from  John  Sherman's  report  as  chairman  of 
the  Senate  Finance  Committee.  This-  is  written  "  as  with 
lead  in  the  rock  forever,"  in  the  minds  of  all  true  money 
reformers  :  "  It  became  necessary  to  depreciate  the  notes  in  order 
to  create  a  market  for  the  Bonds.  Ihe  limit  of  the  notes  was 
trebled  and  the  right  to  convert  them  taken  away." 

Yet,  in  spite  of  all  these  tricks,  it  was  hard  to  get  the  legal 
tenders  away  from  the  people.  No  nation,  before  or  since, 
ever  had  a  sufficiency  of  good  money.  The  consequent 
prosperity  was  enormous.  For  once,  our  people  were,  like 
France,  doing  business  with  money,  instead  of  the  usual  vast 
preponderance  of  promissory  notes  and  checks,  in  the  Eng- 
lish style. 

At  the  time  of  this  writing,  the  city  of  New  York  enjoys, 
for  the  first  time  in  many  years,  a  full  supply  of  water ; 
enough  to  reach  all  the  top  floors  of  four-story  houses.  Such 
was  the  condition  of  this  country  as  to  currency  in  1864  and 
1865.  For  once,  the  outlying  rural  districts  had  money 
enough  to  do  business  with. 

But,  as  usual,  the  dealers  in  money  and  securities  made  the 
big  rake.  Those  who  had  money,  and  knew  that  after  the 
close  of  the  war  the  law  would  be  repealed,  purchased  the 
legal  tenders  at  the  heavy  discount — they  costing  them  not 
more  than  $40  on  the  $100,  in  coin — and  invested  them  in 
six  per 'cent,  bonds,  under  the  management  of  Secretary 
McCulloch.  There  is  nothing  in  the  financial  history  of  the 
United  States  of  which  the  people  had,  and  have,  greater 
cause  to  complain  than  this  law  and  its  effects,  and  none  for 
which  the  bondholders,  capitalists,  and  national  bankers  had, 
and  have,  more  cause  to  feel  grateful.  The  passage  of  this 
Act  of  March,  1863,  was  the  most  effectual  plan  that  could 
have  been  adopted  to  carry  out  the  policy  of  crushing  the 
legal-tender  notes — first  introduced  in  favor  of  National 
banks  in  the  speech  of  Mr.  Sherman,  in  February,  1863. 
But  this,  as  well  as  all  other  efforts,  failed.  The  people  still 
confided  in  legal-tender  notes,  as  the  best  money  they  could 
have,  notwithstanding  these  combined  efforts  to  destroy 
them. 


OUR  MONEY  WARS. 


117 


All  branches  of  business  flourished  in  a  healthy  way; 
every  one  was  paying  off  old  debts  and  mortgages.  The 
condition  and  prospect  was  disgusting  only  to  money- 
lenders.   

The  scheme  for  getting  out  the  five-twenties  at  last  began 
to  work,  by  help  of  Jay  Cooke  &  Co.  Spaulding  gives 
July  1,  1S63,  $168,880,250  of  5-20S  sold  ;  October  1,  $278,- 
5 it. 500  ;  and  January  21,  1864,  $500,000,000,  and  $11,000,000 
over. 

By  the  Act  of  July  ii,  1863,  the  ten  days  loans,  that 
were  raised  from  $25,000,000  on  February  25,  1S62,  to 
$50,000,000  on  March  17,  1862,  are  raised  to  $100,000,000. 
Such  were  the  temporary  makeshifts  during  the  great  war. 

B.  S.  Heath  gives  the  paper  currency  outstanding  July  1, 
1863,  as  follows  :  Old  Demand  and  Treasury  notes  of  the 
time  before  the  war  (I  give  only  millions)  one  million  :  ten- 
days  loans  and  certificates,  259  millions  ;  seven-thirties, 
140  millions  ;  non-interest,  demand  and  legal-tender  notes, 
382  millions  ;  fractional  currency  20  millions ;  and  State 
bank  notes  239  millions;  or  about  1,041  millions  in  all. 

The  same  writer  gives  this  list  of  State  bank  money  from 
1854  to  1863  :  1854,  205  millions  ;  1855,  187  ;  1856,  196  ; 
i857>  2I5;  l858>  "SS;  l859-  J93;  l86o,  207;  1861,  202; 
1862,  184;  and  1863,  239  millions. 


In  October,  1863,  gold  reached  1.50. 

Sarsaparilla  Townsend's  Wisdom. — One  of  the  most 
remarkable  cases  of  early  illumination  upon  the  money  ques- 
tion was  that  of  Dr.  S.  P.  Townsend.  This  noted  man 
made  a  fortune  and  did  a  public  service  by  popularizing 
sarsaparilla.  Clear  back  in  1863,  he  knew  nearly  all  that 
we  do  now  about  this  question.  Many  will  remember  the 
"  palace  "  he  built  on  Fifth  Avenue,  New  York,  where  that 
of  A.  T.  Stewart  now  stands.  It  was  one  of  the  joys  of 
Stewart's  life  to  pull  it  down  and  build  a  finer  one  en  the 
same  spot. 

As  to  Townsend's  career,  he  shall  speak  for  himself.  His 
able  and' well-informed  brother,  Tappen,  first  indoctrinated 
me  in  "  currency  reform  ",  and  has  fought  a  good  fight  in  the 
cause,  even  unto  death. 

In  a  speech  before  the  Union  League  of  New  Providence, 


n8  OUR  MONEY  WARS, 

N.  J.,  November  9,  1863,  Dr.  Townsend  went  over  the  ques- 
tion very  thoroughly.  Here  are  some  of  his  points  :  He 
said  that  when  the  first  Sumter  gun  was  fired,  he  was  build- 
ing fifty  large  houses  on  Murray  Hill,  New  York.  His  vent- 
ure was  prostrated  as  by  a  tornado.  But  a  new  tariff  and  a 
new  currency  set  business  a-going  again.  Capitalists  who 
do  not  think  that  the  country  is  safe  unless  money  is  tight 
and  merchants  in  distress,  and  dealers  in  cotton  that  is 
marketed  in  England  like  to  have  money  scarce  in  America. 
Already  he  saw  Mr.  Chase  shivering  in  terror,  like  Frank- 
enstein, before  the  mighty  genii,  the  Greenbacks  and  Demand 
notes,  that  he  had  created.  But  he  informed  the  Secretary 
that  the  time  was  passed  for  this  country  to  be  ruled  with  a 
rod  of  gold  "  more  powerful,  more  cruel  than  a  rod  of  iron." 
He  was  wise  about  the  price  of  gold,  and  said  : — The  high 
premium  on  gold  has  indisputably  been  of  incalculable  value 
to  the  country ;  it  has  certainly  prevented  excessive  impor- 
tations of  foreign  goods ;  and  enabled  our  people  to  export 
hundreds  of  millions  of  dollars  in  value  of  the  products  of 
the  country,  which,  with  gold  at  par,  would  have  remained  at 
home.  Sir,  while  men  are  eager  to  sell  marble  stores  in 
Broadway  and  Wall  Street  for  a  less  price  (and  take  pay  in 
Greenbacks)  than  the  same  property  would  have  sold  for 
before  the  suspension  of  specie  payments,  I  cannot  be  made 
to  believe  that  this  money  is  depreciated.  The  same  is  true 
of  Brooklyn  property,  and  of  farms  in  any  direction  within 
fifty  miles  of  the  great  metropolis.  *  *  *  The  owners  of 
coal-fields  and  the  stock-holders  of  the  railroads  and  canals 
leading  to  the  mines  form  a  combination,  taking  advantage 
of  the  requirements  of  the  Government  and  people,  and  ask 
an  enormous  price  for  coal.  Is  it  the  Greenbacks  or  the  ex- 
tortioners that  should  be  censured  ?  Monopolists  can  in- 
crease the  price  of  any  article,  including  gold,  at  pleasure. 
*  *  *  It  is  curious  but  true,  that  it  requires  as  much 
nerve  and  courage  for  a  statesman  to  advocate  the  use  of 
Treasury  notes  in  Congress  as  it  formerly  did  to  oppose  the 
encroachments  of  the  slave  power.  The  money  kings  flourish 
and  use  their  thongs  with  all  the  audacity  that  the  slave 
lords,  in  olden  time,  used  their  slave-whips.  That  staunch, 
practical,  common-sense  man  and  true  patriot,  Thaddeus 
Stevens,  was  ridiculed,  last  winter,  in  and  out  of  Congress, 
for  proposing  to  use  Treasury  notes  not  bearing  interest,  in 


OUR  MONEY  WARS.  119 

preference  to  those  that  did.  Old  Thad,  as  he  was  called, 
never  was  cowed  by  the  slave-holding  aristocrats.  May  he 
as  successfully  fight  the  bullionists. 

1864. 

Ten-Day  Loans. — The  Act  of  Jan.  30,  1864,  added  50 
Million  dollars  to  the  Ten-Day  Loans — making  150  millions. 
Spaulding  makes  this  significant  admission:  "The  certifi- 
cates were  circulated  to  some  extent  in  the  clearing-houses, 
and  among  individuals  ;  thereby  aiding  the  general  inflation 
that  began  with  the  passage  of  the  Legal-tender  Act." 

Act  of  March  2,  1864.  A  loan  of  $200,000,000,  five  or 
six  per  cent.  10-40S. 

Government  Selling  Gold. — The  Act  of  March  17,  1864, 
gives  the  Secretary  of  the  Treasury  power  to  sell  gold,  and 
to  pay  interest  upon  bonds,  one  year  in  advance  of  when  it 
became  due  :  with  or  without  rebate. 

Here  is  this  precious  joint  resolution  of  Congress  of  March 
17,  1864 — a  fair  specimen  of  the  more  infamous  and  bare- 
faced steals  in  which  that  body  connived  with  the  usurers. 
It  read  :  "  That  the  Secretary  of  the  Treasury  be  authorized 
to  anticipate  the  interest  on  the  public  debt,  by  any  period 
not  exceeding  one  year,  from  time  to  time,  cither  ivith  or  with- 
out rebate  of  interest  upon  the  coupons,  as  to  him  may  seem  ex- 
pedient ;  and  he  is  hereby  authorized  to  dispose  of  any  gold 
in  the  Treasury  of  the  United  States  not  necessary  for  the 
payment  of  interest  on  the  public  debt." 

Thus  did  the  rogues  in  and  out  of  Congress  suck  the  life- 
blood  of  the  people  during  the  most  terrible  exigencies  of 
the  war. 

S.  M.  Brice  of  Mound  City,  Kansas,  in  his  able  "  Financial 
Catechism,"  printed  in  1SS2,  speaks  in  the  following  spirited 
way  of  this  sweet-scented  transaction  : — 

No  scruples  were  entertained  with  regard  to  the  means  to 
be  used,  so  that  the  robbery  could  be'  accomplished  under 
cover  of  law.  The  laws  under  which  the  bonds  were  issued 
called  for  paying  the  usury  in  coin  semi-annually.  Coin 
was  now  at  a  premium  of  2.85.  The  opportunity  must  not 
be  lost..  A  law  must  be  passed  in  order  that  this  advantage 
could  be  realized  to  its  fullest  extent.  Accordingly,  on  March 
17,  1864,  an  act  was  passed  authorizing  the  Secretary  of  the 
Treasury  to  pay  the   usury  one  year  in   advance,   without 


120  OUR  MONEY  WARS. 

rebate.  Here  was  an  opportunity  for  a  nice  financial  trans- 
action :  The  money-dealer  has  invested  $35,100  in  coin  in 
$100,000  legal-tender  notes  ;  he  steps  into  the  United  States 
Treasury  and  pays  these  notes  for  a  bond  of  $100,000,  bear- 
ing usury  at  the  rate  of  six  per  cent,  per  annum.  He  now 
draws  usury  from  the  Government  on  nearly  three  times  as 
many  dollars  as  he  has  invested  in  gold.  But  still  not  satis- 
fied he  says :  "  Mr.  Secretary,  I  believe  since  the  passage 
of  the  late  Act  of  Congress,  you  are  permitted  to  pay  the 
usury  on  these  bonds  one  year  in  advance,  without  rebate. 
Would  it  be  convenient  for  you  to  pay  me  the  first  install- 
ment on  this  bond  this  morning?" 

Certainly.  And  the  accommodating  Secretary  counts  him 
out  $6,000  in  gold  for  the  first  year's  usury  on  his  bond.  He 
steps  across  the  street  and  sells  his  gold  to  an  importer  for 
$2.85  in  currency  for  a  dollar  in  gold,  giving  him  $17,100, 
with  which  he  returns  to  the  Treasury  and  invests  in  another 
six  per  cent,  bond  of  that  amount.  He  now  has,  on  account 
of  the  vicious  legislation  of  the  Congress  of  the  United  States, 
six  per  cent,  bonds  to  the  amount  of  $117,100  for  an  outlay 
of  $35,100 — more  than  three  dollars  for  each  one  invested. 
He  might  have  demanded,  under  the  law,  the  usury  on  this 
bond  also,  for  a  year  in  advance.  But  extreme  modesty  com- 
pelled him  to  forbear  encroachments  on  the  time  of  the 
gentlemanly  officials,  in  order  to  give  opportunity  for  others 
of  the  bondholding  fraternity  to  avail  themselves  of  the 
special  privilege  created  for  them  by  law  to  rob  the  Treasury 
of  the  United  States. 

Hereby  hangs  a  long  tale. 

During  the  forty- fifth  Congress  Representative  J.  B.  Weaver 
introduced  into  the  House  the  following  resolution:  "Re- 
solved, That  the  Secretary  of  the  Treasury  be,  and  is  hereby 
directed  to  report  to  this  House  whether  he  has  at  any  time 
anticipated  the  payment  of  interest  on  the  public  debt :  if  so, 
how  much  has  been  paid  in  advance,  and  to  whom." 

This  resolution  was  referred  to  the  Committee  on  Ways 
and  Means,  of  which  Fernando  Wood  was  chairman.  Mr. 
Wood  sent  the  resolution  to  Secretary  Sherman,  with  a  re- 
quest to  state  when  he  would  report.  Mr.  Sherman  replied 
that  "  There  was  no  public  document  that  would  give  the  infor- 
mation required.'"  But  he  added,  "  The  Depa7iinent  has  been 
in  the  habit  for  Jive  years  [he  knew  well  it  was    16  years]  of 


OUR  MONEY  WARS.  121 

paying  the  interest  in  advance  without  charging  anything." 
When  we  recollect  that  the  act  permitting  this  outrage  was 
passed  March  17,  1864,  when  gold  was  at  a  premium,  which 
made  it  a  big  object  to  obtain  the  usury  in  advance  ;  and  this 
resolution  of  inquiry  was  sent  to  the  Secretary  in  1880,  16 
years  after,  when  gold  commanded  no  premium,  and  he  states 
that  it  has  been  the  custom  for  the  last  five  years  to  pay  the 
interest  on  the  bonds  one  year  in  advance  without  charging 
anything — connected  with  the  other  statement,  that  there 
was  no  public  document  in  his  office  which  would  show  how 
much  money  had  been  so  paid,  and  to  whom  paid,  we  are 
driven  to  the  conclusion  that  it  has  been  the  practice  since 
the  passage  of  the  act ;  and  that  the  Secretaries  of  the  Treas- 
ury have  conspired  with  the  money-dealers  to  rob  the  Govern- 
ment through  all  this  period,  and  keep  no  [public]  record  of 
the  fact,  by  which  the  amount  of  the 'robbery  could  be  ascer- 
tained. 

Judge  Warwick  Martin  says  : — The  laws  of  1862  and  1863 
authorized  the  Secretary  of  the  Treasury  to  purchase  bonds 
for  legal-tender  notes,  but  did  not  authorize  him  to  sell  gold 
for  legal-tender  notes,  and  to  purchase  bonds  with  the  pro- 
ceeds. The  Act  of  March  17,  1864,  authorized  the  sale  of 
gold.  Gold  had  accumulated,  and  was  accumulating  so  fast 
in  the  Treasury  that  from  one  hundred  to  one  hundred  and 
fifty  millions  of  dollars  were  constantly  in  the  Treasury. 
This  act  authorized  it  to  be  sold  for  legal-tender  notes.  Mr. 
Fessenden,  and  even  Mr.  McCulloch,  sold  this  gold  without 
giving  notice  of  the  time  when,  and  the  place  where  the  sales 
would  take  place.  This  had  a  salutary  influence  upon  Wall 
Street.  The  gold  gamblers  could  not  tell  when  and  where 
the  blow  would  fall.  But,  nevertheless,  the  sales  of  gold 
were  not  wisely  made.  These  Secretaries  of  the  Treasury 
should  have  urged,  in  all  their  communications  to  Congress, 
the  absolute  necessity  of  making  the  legal-tender  notes  re- 
ceivable for  duties  on  imports  ;  which  alone  would  at  once 
have  brought  them  to  par  with  gold,  and  made  them  more 
desirable  than  gold.  But  they  did  not  see  proper  to  do  this. 
In  the  absence  of  such  a  law,  they  should — with  the  large 
amount  of  gold  in  their  possession — have  forced  legal-tender 
notes  to  par  with  coin,  by  selling,  and  continuing  to  sell, 
$5,000,000  per  day.  Instead  of  this,  small  sales  only  were 
made.     The  object  seemed  to  be  to  make  a  profit  upon  the 


I22  OUR  MONEY  WARS. 

sale  of  gold  ;  instead  of  reducing  the  discount  upon  the 
legal-tender  notes.  There  never  was  a  time  when  the  forcing 
of  $10,000,000  or  $20,000,000  of  gold  upon  the  market  would 
not  have  broken  down  the  Wall  Street  combination  to  keep 
it  up.  On  "  Black  Friday,"  in  1869,  the  sale  of  $5,000,000 
reduced  gold  from  60  per  cent,  premium  to  30  per  cent. 
The  sale  of  another  $5,000,000  would  have  brought  it  to  20 
per  cent.  To  have  continued  these  sales  every  day  for  a 
week  would  have  brought  legal  tenders  to  par,  without  the 
sale  of  more  than  $30,000,000  coin.  The  coin  would  have 
come  back  into  the  Treasury  immediately,  in  payment  of 
duties  on  imports,  or  for  certificates  of  deposits.  The  busi- 
ness demand  for  gold  was  small :  the  speculative  demand 
was  large.  In  this  way,  the  Secretary  of  the  Treasury  could 
and  should  have  broken  up  the  gold  sales.  But  from  the  days 
of  Chase  and  Fessenden,  there  was  a  combination  between 
Wall  Street  and  the  Treasury,  to  increase,  instead  of  reduc- 
ing, the  premium  on  gold  for  legal-tender  notes  ;  the  object 
being  to  drive  them  from  circulation,  and  fill  their  places 
with  National  bank  notes. 

Interest-bearing  Notes  made  Legal  Tender. — The 
Act  of  June  3,  1864,  Revised  Statutes,  section  3476,  specially 
provides  :  "  Treasury  notes,  bearing  interest,  may  be  paid  to 
any  creditor  of  the  United  States  at  their  face  value,  exclud- 
ing interest;  or  to  any  creditor  willing  to  receive  them  at  par, 
including  interest." 

Here  is  the  famous  section  of  that  same  act  on  which  is 
based  the  true  statement  that  the  National  banks  borrow 
from  the  Government  at  one  per  cent.:  "  And  in  lieu  of  all 
existing  taxes,  every  association  shall  pay  to  the  Treasurer 
of  the  United  States,  in  the  months  of  January  and  July,  a 
duty  of  one-half  of  one  per  centum  each  half  year,  from  and 
after  the  first  clay  of  January,  1864,  upon  the  average  amount 
of  its  notes  in  circulation." 

Upon  this  subject,  the  late  John  G.  Drew  sent  me  the 
following  letter  when  I  was  editing  in  Chicago  : 

John  G.  Drew,  Journalist. 

Elizabeth,  N.  J.,  Aug.  14,  1891. 

Friend  L.: — Do  you  notice   a  statement  current  in  the 

papers  that  John  Sherman  has  recently  said  that  he  never 

knew  that  the  Government   ever  loaned  money  at  one  per 

cent,  interest  (and  called  it  tax).     If  he  would  kindly  refer 


OUR  MONEY  WARS.  123 

to  his  Revised  Statutes  of  the  United  States,  section  5157  et 
ultra,  or  section  39  et  ultra  of  the  National  Bank  Laws,  chap. 
3,  headed,  "Obtaining  and  issuing  circulating  notes,"  he  can 
refresh  his  memory  muchly.  He  should  not  rise  from  that 
interesting  and  exhilarating  study  without  especially  noting 
and  digesting  section  5214  Revised  Statutes,  and  section  go 
National  Bank  Laws,  where,  with  an  insolence  worthy  of  a 
Nero  or  a  Caligula,  it  rules  on  the  superincumbent  filth  in 
part  as  follows  : 

[Mr.  Drew  then  quotes  the  law  as  given  above,  and  adds  :] 
But,  dearly  beloved,  don't  publish  it  in  the  Sentinel  of  Gath, 
and  keep  it  from  the  Express  of  Askelon  ;  or  the  distributors 
of  hayseed  may  abandon  their  claim  for  two  per  cent, 
money,  and  adopt  the  time-honored  plan,  never  forgotten  by 
John  Sherman,  of  lending  money  on  good  security  for  noth- 
ing, except  the  privilege  of  taxing  the  loan  one  per  cent,  per 
year  "  in  lieu  of  all  existing  taxes." 

National  Banks  Fixed  for  Gambling. — The  Act  of 
June  13,  1864,  repeals  the  Act  of  February  25,  1S63,  and 
provides  more  fully  and  extensively  for  the  issue  of  the  Na- 
tional bank  circulation.  One  provision  is  that  banks  in 
cities,  or  money  centers,  shall  always  keep,  as  reserves,  25 
per  cent,  of  their  circulation  and  deposits  in  lawful  money, 
or  legal-tender  notes  ;  and  that  banks  not  in  money  centers 
should  keep  15  per  cent,  of  the  circulation  and  deposits  in 
lawful  money.  A  neglect  to  comply  with  this  clause  in  the 
law  subjects  banks  to  the  forfeiture  of  their  charters. 
These  banks  had  fully  secured  their  circulation  by  bonds  of 
the  United  States  to  the  extent  of  10  per  cent,  over  the 
amount  issued  upon  them.  The  legal-tender  notes  were 
not,  therefore,  required  to  make  the  circulation  secure.  The 
object  of  this  section  of  the  law  was  to  reduce  the  amount  of 
legal-tender  notes  in  circulation,  and  to  fill  their  places  ivith 
National  bank  notes;  and  also  to  concentrate  money  in  New 
York  and  other  money  centers,  for  speculative  purposes. 
This  act  required  these  banks,  before  they  could  lift  their 
bonds  deposited  in  the  Treasury  as  security  for  circulation, 
to  return  their  notes  to  the  Treasury.  This  was  just  and 
proper  ;  but  we  will  see,  further  on,  how  the  law  was  changed 
in  the  interest  of  the  banks  and  bondholders.  The  notes  of 
these  banks  were  made  legal  tender  to  the  Government,  and 
to  the  banks,  for  everything  except  duties  on  imports.,  and 


124  OUR  MONEY  WARS. 

interest  on  the  public  debt ;  but  the}-  were  not  legal  tender 
to  the  people,  or  receivable  in  redemption  of  legal-tender 
Treasury  notes.  The  former  were  redeemable  in  the  latter, 
but  the  latter  were  not  redeemable  in  the  former. 

Judge  Warwick  Martin  says  : — The  most  ruinous  provision 
in  the  act  provides  for  selecting  banks  in  redemption  cities, 
to  redeem  the  notes  of  National  banks;  and  that  one-half 
the  reserve  of  said  banks  thus  selected  may  be  in  these  re- 
demption banks.  This  section  in  the  law  took  the  money  of 
the  bank  from  the  place  where  the  bank  was  located,  and 
transferred  it  to  New  York  and  other  places  where  it  was 
not  needed  for  business,  and  where  it  was  used  for  stock  and 
gold  gambling,  to  the  injury  of  the  country.  The  notes  of 
the  banks  needed  no  redemption  by  other  banks.  They 
were  par  everywhere.  The  notes  of  one  bank  were  as  good 
as  those  of  another.  No  redemption  of  said  notes  took 
place.  The  whole  provision  was  intended  to  place  the 
funds  of  National  banks  in  New  York,  so  that  the  money 
market  could  be  controlled  by  New  York  at  any  time.  We 
all  remember  the  disastrous  results  of  said  law  in  the  fall  of 
1873,  when  the  New  York  banks  suspended  currency  pay- 
ments owing  to  their  gambling  operations. 

Gold  Futures  Stopped  and  Unstopped. — The  Act  of 
June  17,  1864,  provided,  under  penalty,  that  neither  gold  nor 
sterling  exchange  should  be  sold  for  future  delivery  ;  which 
was  intended  to  put  a  stop  to  gold  gambling.  While  it  re- 
mained in  force,  this  law  had  the  desired  effect ;  the  gold 
sold  and  purchased  was  demanded  by  the  laws  of  commerce. 
Had  this  law  not  been  repealed,  it  would  have  proved  of  im- 
mense advantage  to  the  United  States.  But  it  would  have 
closed  the  gold  board ;  and  that  Wall  Street  could  not 
permit.  The  brokers  marshaled  their  forces  to  battle  with 
Congress  once  more.  They  went  to  Washington,  "  terrible 
as  an  army  with  banners,"  and  demanded  the  repeal  of  the 
above  law.  Congress  at  once  complied  with  the  demand  ,  the 
law  was  repealed  on  July  2.  It  lived  just  fifteen  days.  Jt  is 
ever  thus  with  Congress,  "  when  they  would  do  good  evil  is 
present  with  them."  The  tax  imposed  by  this  Act  of  July  2, 
1864,  was  never  collected.  The  result  was  that  Wall  Street, 
as  usual,  triumphed  over  Congress. 


Spaulding  shows   that  only  73   millions  of  ten-forties  had 


OUR  MONEY  WARS.  125 

been  sold  by  June  21,  1S64  ;  for  the  reason  that  the  interest 
had  been  reduced  from  six  to  five  per  cent. 

Chase  Frightened  Out. — June  30,  1864,  was  an  im- 
portant date.  Secretary  Chase,  frightened  at  the  rise  of  gold 
to  2.50,  resigned  ;  and  Fessenden,  taking  his  place,  promptly 
put  it  up  to  2.85. 

Spaulding  gives  this  from  Fessenden's  report  on  taking 
hold — as  representing  the  total  currency  issues  outstanding 
at  that  date  : 

U.  S.  notes,  Greenbacks $431,178,670.84 

Postal    currency 22,894,877.25 

Interest-bearing  legal-tender  Treasury  notes..  168,571,450.00 

Certificates  of  indebtedness 160,720,000.00 

National  bank  notes 25,825,695.00 

State  banks  not  less  than 135,000,000.00 


$944,190,693.09 
Seven-thirty  Treasury  notes.   $109,356,150.00 
Temp,  deposit  certificates..        72,330,191.44 

181,686,341.44 


Total  currency  and  used  as  currency $1,125,877,034.53 

Six  per  Cent.  Bond. — An  Act  of  June  30,  1864,  provides 
for  the  issue  of  $400,000,000  six  per  cent,  bonds,  redeem- 
able in  five  or  payable  in  30  or  40  years.  The  Secretary  is 
authorized  to  sell  these  bonds  in  Europe  or  America,  "  for 
coin  or  other  lawful  money  ;  "  or  certificates  of  indebtedness  ; 
or  any  other  obligations  of  the  Government,  excepting  the 
bonded  debts,  whether  bearing  interest  or  not.  The  bonds 
are  to  be  exempt  from  taxation  of  all  kinds.  It  will  be  seen 
that  for  these  bonds  the  legal-tender  notes  were  to  be  re- 
ceived ;  but  this  did  not  authorize  their  reception  for  any 
other  bonds.  This  act  also  provides  for  the  issue  of  $200,000.- 
000  7-30  notes,  in  sums  of  not  less  than  $10;  redeemable  in 
three  years,  and  payable  in  "  lawful  money."  Such  of  these 
notes  as  made  the  principal  and  interest  payable  at  their 
maturity  orlly  were  made  legal  tender, —the  same  as  the 
legal-tender  notes, — for  their  face  value.  To  creditors  of 
the  Government  they  were  to  be  paid  at  par,  including  in- 
terest. They  were  convertible  into  bonds,  at  the  will  of  the 
holder,  or  the  discretion  of  the  Secretary  of  the  Treasury. 
This  act  also  provides  for  the  issue  of  $150,000,000  temporary 


i26  OUR  MONEY  WARS. 

loan  interest  certificates.  Out  of  the  $450,000,000  legal-ten- 
der notes  authorized,  $50,000,000  were  to  be  retained  at  all 
times  in  the  Treasury,  to  redeem  certificates  when  presented. 


B.  S.  Heath  gives  15  million  compound  interest  notes  as 
outstanding  July  1,  1S64. 


Secretary  Fessenden,  in  his  report  in  December,  1864, 
makes  the  following  admissions  that  seem  singulai  in  view 
of  the  conspicuous  part  played  by  him  in  mutilating  the 
Greenback,  etc.  He  said  :  "  The  experience  of  the  past  few 
months  cannot  have  failed  to  convince  the  most  careless 
observer  that,  whatever  may  be  the  effect  of  a  redundant 
circulation  upon  prices  of  coin,  other  causes  have  exercised 
a  greater  and  more  deleterious  influence.  In  the  course  of  a 
few  days,  the  price  of  this  article  rose  from  $1.50  to  $2.85  in 
paper  for  $1.00  in  specie  ;  and  subsequently  fell,  in  as  short 
a  period,  to  $1.87  ;  and  then  again  rose  as  rapidly  to  $2.50; 
and  all  without  any  assignable  cause,  traceable  to  an  increase 
or  decrease  in  circulation  of  paper  money,  or  an  expansion 
or  contraction  of  credit,  or  other  similar  influence  on  the 
market  tending  to  occasion  a  fluctuation  so  violent.  It  is 
quite  apparent  that  the  solution  of  the  problem  may  be 
found  in  the  unpatriotic  and  criminal  efforts  of  speculators 
— and  probably  of  secret  enemies — to  raise  the  price  of 
coin,  regardless  of  the  injury  inflicted  upon  the  country,— or 
desiring  to  inflict  it."  No  man  living,  except  John  Slier- 
man  of  Ohio,  was  better  able  to  explain  how,  and  through 
whose  instrumentality,-these  rascally  speculators  were  enabled 
to  prosecute  their  "unpatriotic  and  criminal  efforts,"  than 
Mr.  Fessenden  himself.  Under  the  circumstances,  Mr.  Fes- 
senden did  not  find  the  position  of  Secretary  of  the  Treas- 
ury a  very  comfortable  one  ,  and  at  the  beginning  of  Mr. 
Lincoln's  second  term  he  surrendered  it  with  feelings  of 
great  relief. 


In  1864  new  cent  and  two-cent  pieces  were  created,  the 
cent  containing  only  48  grains  of  copper,  tin  and  zinc. 
One  dollar  or  one  hundred  of  these  contain  only  4,800 
grains,  instead  of  26,000,  as  under  the  law  of  1792.  A 
pound  of  this  metal  costs  only  20  cents.  It  coins  160  one- 
cent  pieces.     The  commercial  value  of  the  metal  is  only  20 


OUR  MONEY  WARS.  1 27 

cents.  The  legal  value  of  the  money  is  $1.60.  The  law  here 
makes  a  clear  gain  of  $1.40. 

It  will  be  observed  that  two  new  metals,  tin  and  zinc,  not 
named  in  the  Constitution,  were  thus  introduced  as  money 
metals. 

Playing  Ink-Fish. — An  impartial  review  of  the  financial 
history  of  these  war  years  seems  to  lead  to  the  conclusion 
that  our  leading  politicians  were  trying  to  play  ink-fish  ;  and 
so  blacken  the  waters,  that  no  ordinary  honest  mortal  could, 
at  any  future  time,  see  through  all  the  ins  and  outs  of  their 
fifteen  different  kinds  of  currency  (when  the  plain  Green- 
back was  all  that  was  necessary)  ;  and  detect  the  one  fact 
running  through  it  all — that  the  main  object  was  to  play 
into  the  hands  of  the  usurers. 

1865. 

Carey  on  McCulloch. — Noble  Henry  C.  Carey  said, 
in  1875  :  "  At  the  close  of  the  war,  Mr.  McCulloch  was 
seated  in  the  Treasury  chair,  there  placed  by  Mr.  Lincoln, 
in  the  full  belief  that  he  was  a  decided  protectionist,  and 
as  decided  an  opponent  of  contraction.  That  he  was  so  in 
May,  a  few  weeks  later,  I  know  from  personal  intercourse 
with  him.  Nevertheless,  but  three  months  later — and  with- 
out the  slightest  explanation  of  the  cause  of  change — he 
presented  himself,  in  correspondence  with  his  agent  then  in 
England,  in  a  totally  different  character.  That  change  was 
to  be  followed  in  October  by  his  Fort  Wayne  decree — as 
discreditable  a  paper,  in  my  belief,  as  was  ever  issued  from 
the  treasury  of  any  civilized  country  whatever.  By  it,  all 
who  were  so  unfortunate  as  to  be  in  debt,  were  cautioned 
that  they  must  sell  off  and  pay  their  debts  ;  all  who  could 
command  the  use  of  money  being  simultaneously  cautioned 
not  to  purchase ;  the  prices  of  labor,  materials,  houses  and 
lands  being  all  too  high,  and  it  being  the  determination  of 
the  Treasury  to  bring  them  all  down  to  "hard  pan  "  ;  thus 
restoring  to  us  that  admirable  system  which  had  existed  before 
the  war,  when  each  successive  British  crisis  brought  ruin  to 
half  the  households  of  the  country  ;  and  so  effectually  pre- 
vented the  growth  of  public  confidence  that  the  prices 
paid  as  interest  ranged  between  six  and  200  per  cent., 
whenever  not  so  high  as  500  per  cent.  Shortly  thereafter, 
the  Controller  of  the  Currency  made  a  report,  by  which  it  was 


128  OUR  MONEY  WARS. 

clearly  shown  that  the  total  amount  of  bank-notes,  Green- 
backs and  interest-bearing  legal  tenders,  in  actual  use,  as 
money,  among  our  people,  was  but  $460,000,000  ;  being  but 
$80,000,000  more  than  the  notes  of  and  under  20  dollars, 
now  in  use  among  the  people  of  France  ;  and  less  by  above 
$100,000,000  than  the  total  notes  in  use  among  a  people  who, 
more  than  almost  any  other,  had  been  accustomed  to  regard 
the  precious  metals  as  the  only  description  of  money  on 
which  they  could  place  reliance.  Add  to  the  notes  the 
metallic  money  in  actual  use  in  the  country,  and  it  will  be 
found  that  the  currency  in  actual  use  exceeds  by  fully  fifty 
per  cent,  that  which  then  here  existed,  whose  extraordinary 
abundance  was  denounced  by  a  gentleman  who,  a  few 
months  before,  had  accepted  office  as  an  anti-contractionist. 
*  *  *  The  Treasury  was  converted  into  a  great  manufactory  of 
bonds  for  exportation  ;  and  to  the  end  that  a  foreign  market 
might  be  created,  Congress  was  repeatedly  urged  to  put  the 
country  on  a  par  with  Spain,  Turkey,  Egypt,  and  other  semi- 
civilized  countries  ;  by  providing  that  the  interest  should  be 
made  payable  on  the  London  Exchange  ;  these  extraordinary 
and  expensive  operations  being  intended,  as  we  were  as- 
sured, as  a  means  of  reaching  that  early  resumption  of  specie 
payments,  with  its  attendant  advantages  to  the  already  rich, 
from  which  Mr.  Secretary  McCulloch  had  so  utterly  revolted, 
throuo-hout  the  first  few  weeks  of  his  administration. 


The  Act  of  January  25,  1865,  provides  for  the  issue  of 
non-interest-bearing  Treasury  notes,  in  lieu  of  any  balance 
of  the  loan  of  June  30,  1864;  provided  that  this  issue  shall 
not  extend  the  amount  to  over  $400,000,000. 


February  4,  1S65,      gold  was  2.00. 

Seven-Thirties. — An  Act  of  March  3,  1865,  provides  for 
the  issue  of  $600,000,000  bonds  or  Treasury  notes,  the  bonds 
to  bear  six  per  cent,  interest,  and  to  run  four  years  ;  none  of 
which  were  to  be  for  less  than  $50.  They  are  payable  at 
any  time  within  forty  years.  If  these  bonds  are  paid  in  other 
lawful  money,  they  were  to  bear  7.30  per  cent,  per  annum. 
Authority  is  given  to  sell  the  bonds  in  the  United  States  and 
in  Europe,  for  coin  or  for  Treasury  notes,  or  legal-tender 
notes,  or  any  obligations  of  the  Government,  bearing  or  not 
bearing  interest ;  excepting  bonds  of  the  United  States. 
This  act  was  passed  at  the  request  of  McCulloch,  and  was 


OUR  MONEY  WANS. 


129 


intended  to  cause  all  forms  of  legal-tender  money  issued  by 
the  United  States  to  be  funded  into  bonds.  This  act 
positively  prohibits  the  issue  of  any  more  legal-tender  notes. 
The  plan  was  to  retire  and  destroy  all  of  said  notes  ;  so  that 
the  National  banks  might  have  an  open  field  for  circulation. 
The  war  then  was — as  all  saw — about  to  end.  The  monied 
men  were  buying  legal-tender  notes  at  a  heavy  discount, 
intending  to  invest  them  in  bonds,  which  they  did. 


Another  Act  of  March  3,  1865,  provides  that  National 
banks  shall  be  granted  90  per  cent,  circulation  upon  bonds 
up  to  $500,000,  but  less  than  90  per  cent,  when  the  bonds 
exceed  that  sum.  This  appears  to  have  been  passed  to 
prevent  banks  in  large  cities  from  taking  up  all  the  circula- 
tion. This  law  is,  however,  repealed  by  the  Act  of  January 
14,  1875. 

State  Banks  Taxed  to  Death. — Another  Act  of  March 
3,  1865,  imposed  a  heavy  tax  upon  all  State-bank  circulation, 
to  take  effect  after  July  1,  1866.  After  the  banks  suspended 
in  December,  1861,  they  greatly  increased  their  circulation, 
and  used  their  means  to  injure  the  legal-tender  notes.  All 
their  strength  was  combined  to  compel  the  Government  to 
abandon  the  legal  tenders,  and  to  use  their  suspended  notes. 
If  the  bank-notes  lived,  the  Government  notes  must  die. 
This  tax  was  imposed  to  put  an  end  to  State-bank  circula- 
tion. It  had  the  desired  effect.  The  act  was  justifiable. 
The  Government  had  the  same  right  to  suppress  this  hostile 
circulation  that  it  had  to  put  down  any  other  public  enemy. 

The  Freedmen's  Bank. — Another  Act  of  March  3,  1865, 
established  the  Freedmen's  Bank,  authorizing  loans  to  be 
made  upon  Government  bonds  only.  After  certain  sharks 
in  Washington  obtained  control  of  the  bank,  they  induced 
Congress  to  change  the  charter,  allowing  investments  made 
in  bonds  and  mortgages,  and  loans  to  be  made  upon  col- 
laterals. This  ruined  the  bank.  Had  the  institution  been 
confined  to  its  original  charter,  all  would  have  been  right. 
The  bank  would  have  been  a  blessing  to  the  colored  race. 
But  the  politician  ruined  it  and  them. 


In  April  gold  was  1.50. 

McCulloch's  Treachery. — Henry  C.  Carey  thus  reports 
upon  McCulloch's  treachery  : — 

9 


130  OUR  MONEY  WARS. 

In  May,  1865,  very  shortly  after  his  accession  to  the  post 
of  Secretary,  I  had  a  conversation  with  him,  in  the  course  of 
which  he  declared  himself  a  disciple  of  Mr.  Clay,  and 
thorough  believer  in  his  protective  doctrines.  Regarding 
him  as  sincere  in  this  expression  of  opinion,  I  said  that,  in 
view  of  the  great  changes  now  to  be  met — millions  of  men, 
North  and  South,  returning  from  the  field  and  needing  to 
seek  employment,  at  a  time  when  the  Government  must  not 
only  cease  to  be  a  purchaser,  but  must,  on  the  contrary,  be- 
come a  seller  of  commodities  it  had  already  purchased — it 
was  most  desirable  that  all  our  measures  should  tend  in  the 
direction  of  stimulating  production  and  making  demand  for 
labor;  and  that,  if  I  had  my  will,  gold  should  be  at  2.00  for 
the  next  seven  years  ;  as  the  premium  afforded  a  protection 
that  even  false  invoices  would  not  enable  the  foreigner  to 
avoid. 

Fully  coinciding  in  the  view  thus  suggested,  the  Secretary 
answered :  "  That  is  too  much  ,•  but  I  would  gladly  see  it  at 
1.75."  Three  months  later,  he  was  instructing  his  represent- 
atives abroad,  to  give  assurance  that  we  should  have  resumed 
specie  payments  before  the  first  7-30S  became  due.  Two 
months  yet  later,  came  the  destructive  Fort  Wayne  decree ; 
and  from  that  hour  did  the  Secretary  persist  in  the  absurd 
and  injurious  course  of  policy  therein  announced.  But  few 
months  later,  he  presented  himself  as  an  opponent  of  these 
doctrines  of  Mr.  Clay,  of  which  he  had  been  before  the 
advocate.  What  is  the  value  to  be  attached  to  his  present 
opinions,  may  be  judged  from  this  exhibit,  now  for  the  first 
time,  put  on  paper  ;  although  fully  authorized  by  him  on  the 
day  succeeding  the  conversation  above  described.  Me  is,  as 
I  believe,  the  only  one  of  our  finance  ministers  who  has  ever 
retired  with  the  reputation  of  a  large  fortune,  accumulated 
during  his  term  of  office. 


B.  S.  Heath   makes  the  amount   of   National   bank  notes. 
July  1,  1865,  to  be  67  millions. 


McCulloch   began    to   retire   Greenbacks,   August,    1865. 
Had  70  millions  retired  by  July,  1868. 


Sept.  1,  1865,  830  millions  of  7-30  notes  were  outstanding. 
This  was  the   highest  figure.     They  were   redeemable  Aug. 


OUR  MONEY  WARS.  131 

15,    1867  ;  June    15,  and   July   15,  1S6S.   $195,800  were  out- 
standing June  3,  1875. 

Retiring  Legal  Tenders. — The  Act  of  Sept.  12,  1865. 
The  legal-tender  notes  did  not  come  in  to  be  invested  in 
bonds  as  fast  as  the  Secretary  of  the  Treasury  had  hoped  for, 
An  additional  law  was  enacted  at  the  above  time.  The  war 
was  now  ended.  The  soldiers  and  sailors  had  to  be  paid  off. 
They  did  not  want  bonds;  they  desired  lawful  money.  The 
law  of  March  3,  1865,  had  prohibited  any  further  issues  of 
legal-tender  notes.  L'ut  legal  tenders  were  the  only  money 
which  the  soldiers  were  willing  to  receive,  notwithstanding 
the  heavy  discounts  which  the  law  had  made  upon  them. 
This  law  of  Sept.  12,  1865,  provided  that  the  legal  tenders 
might  be  received  for  bonds  to  the  extent  of  $10,000,000  in 
the  next  six  months,  and  $4,000,000  per  month  after  that 
time.  This  was  continued  until  an  order  came  from  Con- 
gress to  stop  the  reduction.  This  is  styled  an  act  to  retire 
the  legal-tender  notes. 


In  October,  1865,  McCulloch  issued  his  Fort  Wayne 
decree,  announcing  his  determination  to  contract  the 
currency. 

The  Total  Debt. — W.  A.  Birkey  gives  the  following  as 
the  total  debt  and  currency  of  the  country  on  Oct.  31,  1865, 
National  bank  notes  not  included  : 

Total  bonds  (which  he  enumerates) $1,163,769,611.39 

Currency. 
Compound    interest    notes, 

due  in  1867,  1868 173,012,141.00 

7-30  Treasury  notes,  due  in 

1867,  1868 830,000,000.00 

Temporary   loans,  ten-days' 

notice 99,107,745.46 

Certificates  of  indebtedness, 

due  in  1866 55,905,000.00 

Treasury     notes,     five     per 

cent.,  1865 32,536,901.00 

U.  S.  Notes 428,160,569.00 

Fractional  currency 26,057,469.20 

1,644,779,825.66 

Total  debt . .  .$2,808,549,437.05 


132  OUR  MONEY  WARS. 

Two  Billions  of  Currency. — As  to  the  fact  that  there  was 
near  two  billions  of  currency  in  1865  and  1866,  Judge  Wm.  D. 
Kelley  spoke  in  Congress  in  February,  1879.  Quoting  McCul- 
loch's  admission  in  his  report  of  December,  1865,  that  "  30 
millions  of  the  compound  interest  notes  are  in  circulation  as 
currency,  and  many  of  the  small  denominations  of  the  7-30S 
are  also  circulating,  and  all  of  them  tend  in  some  measure  to 
swell  the  inflation"  the  Judge  says  :  "  The  $143,000,000  com- 
pound interest  notes  were  outstanding,  and  were  legal  tender 
for  their  face  value ;  and  if  the  $830,000,000  of  7-30  Treas- 
ury notes  were  not  so,  the  people  who  accepted  and  used 
them  as  such  were  deluded  by  the  phraseology  of  the  law 
under  which  they  were  issued.  If  they  were  not  legal  tender 
the  proviso  which  declared  that  they  should  not  'be  legal 
tender  in  payment  or  redemption  of  any  notes  issued  by  any 
bank,  banking  association  or  banker  calculated  or  intended 
to  circulate  as  money '  was  worse  than  useless  verbiage ; 
inasmuch  as  it  was  calculated  to  deceive,  as  to  the  character 
of  the  security  they  were  to  receive,  those  to  whom  the  Gov- 
ernment was,  under  the  provisions  of  the  act,  to  appeal  for  a 
loan  of  more  than  $800,000,000.  If  they  were  not  intended 
to  be  a  legal  tender  for  all  other  purposes,  why  was  it  neces- 
sary to  thus  specifically  prohibit  banks  from  paying  their  notes 
with  them,  as  they  were  required  to  do  with  the  non-interest- 
bearing  legal-tender  notes,  known  as  Greenbacks  1 " 

This  from  Logan  comes  in  well  here :  "  The  circulating 
medium  has  been  contracted  $1,018,167,784. — John  A.  Logan 
in  Congressional  Record,  page  139,  Appendix  for  1874." 

There  is  abundant  evidence  all  through  this  book  that  we 
had  near  two  billions  of  money  in  1865.  Here  are  some 
items  not  given  elsewhere  : 

Mr.  Hotchkiss,  of  New  York,  July  25,  1866,  in  a  debate  in 
the  House,  said  :  "  We  have  now  in  circulation  about  $1,000,- 
000,000  of  paper  currency,  exclusive  of  the  $800,000,000  of 
7-30S,  which  pass  from  hand  to  hand  as  a  circulating  medium 
to  a  great  extent." 

Mr.  Morrill,  of  Maine,  stated  in  a  speech  in  the  House, 
March  16,  1866:  "That  the  banks  held  immense  sums  of 
interest-bearing  notes  during  the  maturity  of  interest,  and 
were  disposed  to  flood  the  country  with  them  after  interest 
had  been  realized." 

Hon.    W.   Loughridge,    of    Iowa,    April    9,    1874,    in    the 


OUR  MONEY  WARS. 


l33 


House,  said:  "During  the  war  the  volume  of  currency  was 
largely  increased  from  time  to  time,  until  at  its  close  the 
amount  in  circulation,  including  the  7-30S  and  all  the  differ- 
ent issues  which  served  the  use  of  currency,  was  about 
$1, 700,000,000,  and  this  amount  had  been  up  to  the  close  of 
the  war  confined  to  the  States  not  in  rebellion." 

J.  J.  Knox,  late  Controller  of  the  Currency,  said  in  the 
Bankers'  convention,  Oct.  12  and  13,  1887:  "About  four 
years  after  the  war  had  commenced,  in  August,  1865,  the 
public  debt  amounted  to  $2,845,907,426  ;  and  included  in 
this  huge  mountain  of  indebtedness,  there  were  1,540,000,000 
of  Treasury  notes  either  payable  on  demand  or  bearing  inter- 
est, of  which  more  than  $1,500,000,000  was  a  legal  tender.  If 
temporary  loans,  payable  in  thirty  days,  and  certificates  of 
indebtedness,  payable  one  year  after  date,  should  be  included 
with  Treasury  notes,  the  whole  would  amount  to  consider- 
able more  than  three-fifths  of  the  $2,846,000,000  of  the  debt  of 
the  country." — Proceedings  of   the  Convention,  pages  20-21. 

Senators  Beck,  Ferry  and  others,  besides  hundreds  of 
Congressmen  and  business  men,  have  stated  that  the  interest- 
bearing  notes  were  used  as  money,  and  pointed  out  the  dis- 
tress which  followed  their  being  withdrawn  from  circulation. 

McCulloch's  Mad  Policy, — In  his  report  of  Dec.  4, 
1865,  McCulloch  said  to  Congress:  "The  issue  of  United 
Suites  notes  as  lawful  money  was  a  measure  of  expediency, 
doubtless,  and  necessary  in  the  great  emergency  in  which  it 
was  adopted.  But  this  emergency  no  longer  exists;  and 
however  satisfactory  these  notes  may  be  as  a  circulating 
medium,  and  however  desirable  may  be  the  saving  of  inter- 
est, these  considerations  will  not  satisfy  a  departure  from 
that  construction  of  the  Constitution  which  is  essential  to  the 
equal  and   harmonious  working  of  our  peculiar  institutions." 

Reformers  sneeringly  ask,  "What  peculiar  institutions  ?  " 

Again  he  says  :— 

"  The  rapidity  with  which  the  Government  notes  can  be 
withdrawn  will  depend  upon  the  ability  of  the  secretaries  to 
dispose  of  the  securities.  The  Secretary,  therefore,  respect- 
fully but  most  earnestly  recommends  :  First,  That  Congress 
declare  that  the  compound  interest  notes  shall  cease  to  be 
a  legal  tender  :  Second,  that  the  Secretary  be  authorized  to  sell 
bonds  of  the  United  States,  bearing  interest  at  a  rate  not 
exceeding  six  per  cent.,  for  the  purpose  of  retiring  not  only 


134  OUR  MONEY  WARS. 

compound  interest  notes,  but  the  United  States  notes.  The 
first  thing  to  be  done  is  to  establish  a  policy  of  contraction. 

Heath  says  :  "  This  Congress,  established  by  resolution  on 
Dec.  18,  1865.  How  many  of  the  eleven  millions  of  producers, 
toiling  in  their  shops  and  factories,  delving  in  the  subterra- 
nean storehouses  of  the  earth,  or  bending  their  backs  to  the 
harvest  sun,  petitioned  Mr.  McCulloch  to  make  these  sug- 
gestions to  Congress  on  its  meeting  ?  How  many  of  these 
millions  asked  that  the  thing  for  which  they  were  all  toiling 
might  be  made  more  scarce  and  difficult  to  obtain?  How 
many  of  them  prayed  that,  instead  of  receiving  Greenbacks  for 
their  products,  they  might  be  made  to  pay  a  semi-annual  gold 
bonus  to  have  them  destroyed?  How  many  of  them  volun- 
tarily consented  to  have  the  value  of  their  property  depre- 
ciated one-half,  and  the  value  of  their  products  reduced  ? 
How  many  of  them  consented  to  be  turned  into  the  streets, 
their  families  into  the  poorhouse,  a  hundred  thousand  bank- 
rupted— and  the  most  fortunate  among  them  taxed  beyond 
their  ability  to  pay — simply  to  conform  to  a  system  of  con- 
traction, for  the  benefit  of whom  ?  " 

For  some  facts  about  McCulloch  and  Robeson's  "  pe- 
culiar institution,"  in  London,  in  1865,  see  item  about  Mc- 
Culloch's  London  bank  in  "  1862." 

Judge  Kelley  Pleads  Ignorance. — As  to  the  stupid  vote 
for  Resumption  in  Congress,  Dec.  18,  1865,  Judge  \Ym.  D. 
Kelley  said,  in  his  speech  on  "  Financial  Mismanagement," 
Feb.  14,  1879  : — 

I  regret  to  say  that  my  vote  on  that  resolution  was,  with 
the  overwhelming  majority,  in  its  favor  ;  there  having  been 
but  six  members  of  the  House  who  appear  to  have  foreseen 
the  terrible  results  such  a  measure  must  produce,  and  voted 
against  it.  The  resolution  was  adopted  Dec.  18,  1865,  and 
read  as  follows  :  "Resolved,  that  this  House  cordially  concurs 
in  the  views  of  the  Secretary  of  the  Treasury,  in  relation  to 
the  necessity  of  a  contraction  of  the  currency  ;  with  a  view 
to  as  early  a  resumption  of  specie  payments  as  the  business 
interests  of  the  country  will  permit ;  and  we  hereby  pledge 
co-operative  action  to  this  end  as  speedily  as  practicable." 

My  vote  attracted  the  attention  of  many  of  the  most  en- 
lightened business  men  of  Philadelphia ;  from  whom  I 
received  earnest  protests  against  the  initiation  of  a  policy  so 
destructive  as  that  of  attempting  resumption  by  contracting 


OUR  MONEY  WARS.  135 

a  volume  of  currency  that  was  legitimately  and  profitably 
employed  ;  and  the  retirement  of  which,  by  its  conversion 
into  interest-bearing  bonds,  would  inevitably  impoverish  the 
American  people,  and  transfer  our  debt  from  them  to  the 
syndicates  and  bankers  of  Europe.  The  Christmas  vacation 
was  at  hand,  and  on  my  return  to  Philadelphia  my  venerable 
friends  Henry  C.  Carey  and  the  late  Stephen  Colwell,  whose 
work  entitled  "  Ways  and  Means  of  Payment "  is,  in  my 
opinion,  the  most  valuable  contribution  ever  made  by  one 
man  to  the  financial  literature  of  the  world,  each  honored  me 
with  protracted  interviews  ;  during  which  they  approved  the 
judgment  of  the  business  men  who  had  censured  my  vote  ; 
and  so  instructed  me  in  the  laws  of  trade  and  finance,  as  to 
enable  me  to  act  with  an  enlightened  judgment,  on  such  finan- 
cial questions  as  might  thereafter  come  before  Congress. 


136  OUR  MONEY  WARS. 


CHAPTER  XIII. 

1866  to  1873. 
CONTRACTION. 

1866. 

The  Contraction  Act  was  passed  April  12,  1866.  Previ- 
ous to  the  passage  of  this  act  the  Secretary,  under  the 
law  of  1865,  had  been  permitted  to  reduce  the  legal-tender 
notes  $10,000,000.  This  Act  of  1866  gave  him  authority  to 
receive  for  bonds  $4,000,000  legal-tender  notes  per  month. 
Under  this  law  he  went  en  reducing  the  legal  tenders  until 
February,  1868.  He  would  have  continued  the  investment 
of  the  whole  of  them  in  six  per  cent,  bonds  had  not  Congress, 
owing  to  the  solicitations  of  the  people,  compelled  him  to 
stop,  of  which  he  complained.  These  acts  are  disgrace- 
ful to  the  Secretary  of  the  Treasury,  having  been  enacted 
at  his  request,  and  they  are  by  no  means  flattering  to  Con- 
gress. Under  this  act  $1,300,000,000  of  actual  currency  was 
turned  into  bonds. 


Judge  Warwick  Martin  says  of  The  Financial  Difficul- 
ties of  England  in  1866  : — We  have  shown  that  the  finan- 
cial difficulties  of  the  United  States,  in  1866  and  1867,  were 
not  produced  by  speculation,  but  by  a  ruinous  contraction  of 
the  circulating  medium.  In  England,  in  1866,  there  were 
much  greater  financial  embarrassments  than  in  the  United 
States  in  1866  or  1867,  all  of  which  were  caused  by  immense 
speculations  in  railroad  and  other  stocks.  The  consequences 
of  these  speculations  were,  in  England,  most  disastrous. 
Twenty-seven  banks  and  bankers  failed  in  London  in  one 
day.  Hundreds  of  old,  hitherto  substantial  business  houses 
failed.  Among  these  were  Overend,  Gurney&  Co.,  and  Sir 
Morton  Peto,  of  world-wide  fame.  The  monetary  condition 
of  England  was  such  that  the  Bank  was  compelled  to  raise 
the  rate  of  interest  to  the  point  where  the  law  of  1844  allowed 
the  Bank  to  suspend  coin  payments.     What  the  Bank  then 


OUR  MONEY  WARS. 


m 


did  was  equivalent  to  the  suspension  of  specie  payments. 
All  these  results  were  caused  by  wild  speculations.  The 
money  to  carry  on  said  speculations  was  not  suspended  bank 
paper,  or  the  irredeemable  issues  of  any  nation,  or  irredeem- 
able paper  money  of  any  kind.  It  was  the  notes  and  credits 
of  the  great  Bank  of  England,  and  of  the  joint-stock  banks 
of  the  kingdom  ;  all,  at  the  time  they  made  the  advances, 
professing  to  pay  coin  for  their  liabilities. . 

H.  H.  Bryant,  after  showing  how  England  organized  ruin 
here  by  "  calling  "  our  gold  in  1857,  says  : — Now,  in  1866,  the 
Bank  of  England  was  in  trouble  again,  and  failed,  as  she  was 
obliged  to  do  in  1857.  But  we  were  not  on  a  specie  basis  in 
1866 ;  and  she  could  have  no  more  effect  on  our  monetary 
system  than  a  drop  of  water  would  have  when  it  falls  into  the 
ocean — nor  so  much,  for  it  could  have  none  whatever.  Nor 
•could  the  failure  of  every  bank  and  banker  in  all  Europe  have 
caused  a  single  ripple  on  the  surface  of  our  monetary  sys- 
tem. Then  the  industries  of  the  country  could  not  be 
knocked  down,  as  with  a  bludgeon,  and  plundered,  at  ease, 
by  any  one  who  had  thefower  or  the  need  to  demand  a  little 
gold  of  us. 

H.  C.  Carey  says : — The  extreme  importance  of  the 
view  here  presented,  to  wit,  the  necessity  for  avoiding 
"  entangling  alliances  "  in  reference  to  a  matter  so  important 
as  the  monetary  machinery  of  exchange,  was  made  clearly 
obvious  when,  in  1866,  like  a  clap  of  thunder  in  the  clearest 
sky,  the  great  crisis  of  that  year,  greater  than  any  by  which 
it  had  been  preceded,  brought  ruin  to  hundreds  of  what  had 
been  considered  the  greatest  British  houses,  and  made  de- 
mand on  all  the  world  for  aid,  if  the  Bank  of  England  itself 
were  to  be  enabled  to  avoid  suspension.  The  crash  was  ter- 
rific, yet  it  never  affected  our  domestic  operations  for  even  a 
single  hour.  Our  monetary  independence  had  been  estab- 
lished. Our  machinery  of  exchange  being  a  non-exportable 
one,  we  had  no  use  for  gold  ;  and  if  it  were  needed  abroad, 
we  could  say, "  Let  it  go  !  "  Accordingly,  no  less  than  $30,- 
000,000  were  at  once  dispatched ;  the  Bank  was  saved,  and 
injury  was  thus  avoided,  to  an  extent  that  would  scarcely  be 
exaggerated,  were  it  counted  by  hundreds  of  millions  of 
pounds.  And  thus  did  Britain  benefit  by  the  fact  that  the 
currencies  of  the  two  countries  were  different.  Had  we 
been  using  gold,  where  should  we  then  have  found  ourselves  ? 


138  OUR  MONEY  WARS. 

In  the  midst  of  a  crisis  greater  than  the  country  had  ever 
known. 

The  Act  of  July  26,  1866,  provided  that  bonds  issued  to 
the  Pacific  Railroad,  to  the  amount  of  $64,000,000,  might  be 
made  in  sums  greater  than  $1,000,  if  so  required.  These 
bonds  are  all  payable  in  currency. 


Cash  Payments. — Judge  W.  D.  Kelley  thus  describes  the 
blessings  of  "Cash  Payments  "'  in  1S65  and  1866  : — 

We  had,  in  round  numbers,  about  $2,000,000,000  of  circu- 
lating medium  and  reserve.  The  American  people  then  held 
the  greater  part  of  the  debt  of  the  country.  One-fourth  of 
our  national  debt  was  held  by  our  National  banks  ;  one-half 
of  the  discounts  and  loans  made  by  the  banks  were  to  the 
Government. — the  evidences  of  whose  indebtedness  they 
were  glad  to  hold.  Business  men  did  not  want  discounts. 
All  could  get  money  for  whatever  they  had  to  sell.  The 
old-fashioned  credit  system  of  18  months,  or  12  months,  or 
six  months,  or  even  three  months,  had  disappeared.  Cash 
payments  were  the  order  of  the  day;  and  from  ten  to  thirty 
days  was  the  longest  credit  asked  in  ordinary  transactions. 

1867. 

Three  per  Cent.  Certificates. — The  Act  of  March  2, 
1867,  provides  for  the  issue  of  $50,000,000  three  per  cent, 
interest  certificates  to  pay  compound-interest  notes.  These 
certificates  were  to  be  held  by  National  banks  as  reserves, 
instead  of  legal-tender  notes,  which  were  then  so  used. 
This  relieved  the  money  pressure  to  that  extent.  Why  were 
not  $50,000,000  new  legal-tender  notes  issued  in  place  of 
$50,000,000  three  per  cent,  certificates  ?  This  could  have 
been  done  almost  without  cost,  and  it  would  have  saved  $1,- 
500,000  a  year.  Why  were  not  the  $44,000,000,  redeemed 
and  lying  idle  in  the  Treasury,  paid  out  ?  Anything  rather 
than  save  interest  to  the  people.  These  $44,000,000  re- 
mained in  the  Treasury  undisturbed,  until  the  New  York 
banks,  in  1S73,  demanded  them  to  save  themselves  from 
failure  ;  when  $26,000,000  were  paid  out.  The  people  could 
not  get  them.  The  banks  could,  and  did.  The  people 
amount  to  little  with  the  Republican  party.  The  banks  are 
everything. 

"  Addition,  Division  and  Silence." — March  20, 1867,  was 


OUR  MONEY  WARS.  159 

the  date  of  the  long  famous  "  Addition,  Division  and  Si- 
lence "  letter  of  W.  H.  Kemble  ;  to  which  the  New  York  Sun 
was  still  thus  referring  in  18S0  : — 

Does  the  State  of  Pennsylvania  and  the  cit)r  of  Philadel- 
phia still  keep  public  funds  on  deposit  in  the  People's  Bank 
of  Philadelphia?  It  may  not  be  generally  known  in  Penn- 
sylvania, but  the  president  and  principal  owner  of  that  in- 
stitution is  now  a  convict  and  a  fugitive  from  justice,  dodg- 
ing from  State  to  State.  He  is  the  same  man,  who,  while 
himself  State  Treasurer,  wrote  the  following  statement  of  his 
principles  : 

Treasury  Department  of  Pennsylvania, 
Harrisburg,  March  20,  1867. 
My  Dear  Titian, — -Allow   me  to   introduce  to  you    my 
particular  friend,   Mr.  George  O.  Evans.     He  has  a  claim  of 
'some  magnitude  that  he  wishes  you  to  help  him   in.     Put 
him  through  as  you  would  me.     He  understands  addition,  di- 
vision and  silence. 

Yours, 

W.  H.  Kemble. 
To  Titian  J.  Coffey,  Esq.,  Washington,  D.  C. 

It  would  be  interesting  to  know  how  many  millions  of  pub- 
lic money  this  man  has  had  in  his  hands,  by  virtue  of  deposits 
from  State  and  city  treasurers,  say  during  the  last  five  years, 
and  how  many  millions  his  bank  still  holds. 

Vanderbilt  Waters  New  York  Central. — In  1867  and 
1S6S  Cornelius  Vanderbilt  watered  the  stock  of  the  New  York 
Central  and  Hudson  River  Railroad  47  million  dollars.  Upon 
this  eight  per  cent,  dividends  were  regularly  paid.  These 
dividends  upon  that  water,  compounded  annually,  for  thir- 
teen years  [1880],  amounted  to  over  75  million  dollars.  The 
most  of  our  "great"  men,  in  other  industries,  have  done  the 
same — according  to  opportunity. 

1868. 
Sherman's  Entering  Wedge.— In  January,  1868,  John 
Sherman,  being  then  chairman  of  the  Committee  on 
Finance  in  the  Senate,  introduced  a  bill  to  change  the  gold 
coins  of  the  United  States,  so  as  to  make  them  correspond 
with  the  French  five-franc  piece ;  and  to  make  the  silver 
half-dollar  correspond,   in   weight,  to   two   and  a  half  silver 


140  OUR  MONEY  WARS. 

francs  ;  and  dropping  the  dollar  entirely.  This  was  the 
cunningly-applied  entering  wedge,  that  was  to  ultimately 
split  "the  dollar  of  the  Fathers  "  off  from  our  currency. 

A  Short  Stop. — The  Act  of  February  3,  1868,  ordered 
the  reduction  and  destruction  of  the  legal-tender  notes  to  be 
stopped.  They  had  been  reduced  from  $450,000,000  to 
$356,000,000 — reduction  amounting  to  $94,000,000 — and 
six  per  cent,  bonds  given  therefor.  The  politicians  did 
not  order  the  cancellation  of  these  notes  to  cease  because 
they  loved  the  notes,  but  because  the  people  compelled  them 
so  to  do.  Even  Mr.  Sherman  made  a  great  speech  in  favor 
of  this  measure  ;  not  from  the  love  of  legal-tender  notes,  but 
because  he  feared  the  people.  Why  did  not  Congress,  at 
this  time,  add  a  few  hundred  millions  to  the  legal-tender 
notes,  instead  of  increasing  the  National  bank  circulation 
at  large  cost  to  the  people  ? 


The  Act  of  February  10,  1868,  authorizes  the  National 
bank  shares  to  be  taxed  under  State  authority  as  much  as 
those  of  other  banks  were,  but  not  more. 

Check  to  Rothschilds. — It  is  alleged  that  the  Roths- 
childs were  in  possession  of  several  hundred  millions  of 
5-20  bonds,  at  this  time,  purchased  at  about  60  cents  on  the 
dollar,  or  less ;  and  were  particularly  interested,  therefore, 
in  our  politics.  That  their  agent,  August  Belmont,  who 
secured  the  position  of  chairman  of  the  Democratic  National 
Committee,  was  instructed  by  Baron  James  Rothschild,  as 
early  as  March  13,  1868,  that  unless  the  Democratic  Party 
went  in  for  paying  the  5-20  bonds  in  gold,  it  must  be  defeated. 
The  first  step  was  to  have  the  National  Convention  held  in 
New  York  City. 

July  4,  1868,  the  Democratic  Convention  met  in  New  York, 
according  to  programme.  Belmont  and  his  satellites  were 
unable  to  control  the  convention — at  least  in  the  matter  of 
the  platform — and  it  declared  that  all  obligations  against  the 
Government  not  expressly  payable  in  coin  should  be  paid 
in  lawful  money  of  the  United  States.     [See  Oct.  15.] 

"  The  Great  Commoner,"  Thaddeus  Stevens,  was  still 
around,  and  able  to  lift  his  voice.  In  his  speech  of  July  17, 
1868,  he  said  :  "If  I  knew  that  any  party  in  this  country 
would  go  for  paying  in  coin  that  which  is  payable  in  [lawful] 
money,    thus  enhancing  it  one-half, — if  I  knew  there   was 


OUR  MONEY  WARS.  141 

such  a  party  platform,  and  such  a  determination,  this  day, 
on  the  part  of  any  political  party,  I  would  vote  for  the  other 
side,  Frank  Blair  and  all ;  I  would  vote  for  no  such  specula- 
tion in  favor  of  the  large  bondholders,  the  millionaires,  who 
took  advantage  of  our  folly  in  granting  them  coin  payment 
of  interest." 

A  "  Howling  Success." — As  a  specimen  of  how  the 
National  banks  were  "  getting  there  "  all  this  time,  take  the 
following  from  the  speech  of  S.  S.  Marshall  of  Illinois,  in 
Congress,  July  21,  1868: — 

I  will  report  what  a  gentleman  on  this  floor  states  as  having 
occurred  in  an  Eastern  State  within  his  own  observation  : 
"  An  association  of  gentlemen  raised  $300,000  in  currency. 
They  went  to  the  office  of  the  Register  of  the  Treasury, 
and  exchanged  their  currency  for  $300,000  in  six  per  cent, 
gold-bearing  bonds.  They  then  went  to  the  office  of  the 
Comptroller  of  the  Currency,  in  the  same  building,  organized 
a  National  bank,  deposited  their  $300,000  in  bonds,  and  re- 
ceived for  their  bank  $270,000  of  National  currency.  They 
had  let  the  Government  have  $30,000  in  currency  more  than 
they  received  for  banking  purposes  ;  and  had  on  deposit 
$300,000  on  which  they  received  from  the  Government 
$18,000  a  year  in  gold  (exempt  from  taxation).  That  was 
pretty  good  financiering  for  these  bankers  to  receive  $18,000 
in  gold  on  the  $30,000  in  currency  which  they  had  thus 
loaned  to  the  Government. 

"  But  this  was  not  the  whole  story.  They  had  their  bank 
made  a  public  depository.  They  soon  discovered  that  there 
was  scarcely  ever  less  than  $1,000,000  of  Government  money 
deposited  within  their  vaults.  They  did  not  like  to  see  this 
vast  sum  lie  idle.  They  therefore  took  a  million  of  this 
Government  money  and  bought  a  million  of  5-20  bonds  with 
it.  In  other  words,  they  loaned  a  million  of  the  Govern- 
ment's own  money  to  the  Government,  and  deposited  the 
bonds  received  in  the  vaults  of  their  bank,  on  which  they 
received  from  the  same  Government  $60,000  in  gold  annually, 
as  interest. 

"  Thus,  for  the  $30,000  in  currency  which  they  originally 
loaned  the  Government,  they  were  receiving  annually  in 
gold  (and  exempt  from  taxation  at  that)  $78,000.  And  all 
this  was  under  the  regular  operation  of  your  banking  laws." 

The  Act  of  July    25,   186S,    provides   for  the    issue    of 


142  OUR  MONEY  WARS. 

$25,000,000  more  three  per  cent,  interest  certificates,  of  the 
same  character  and  for  the  same  purpose  as  the  $50,000,000 
provided  for  in  the  Act  of  March  2,  1867.  They  also  were  to 
be  held  by  banks  as  reserves,  for  which  legal-tender  notes 
were  then  held  ;  so  that  the  legal-tender  notes  might  circu- 
late. Why  not  issue  new  legal-tender  notes  in  place  of  the 
certificates  and  save  the  interest?  But  this  was  not  the 
policy  of  Mr.  Sherman  and  of  Wall  Street. 

Rothschilds  Win,  Seymour  Beaten. — August  Belmont 
owned  a  large  interest  in  the  N.  Y.  World,  the  leading 
Democratic  paper  of  the  country,  which  on  Oct.  15,  1868, 
came  out  in  a  double-leaded  editorial  denouncing  Seymour 
as  unavailable,  and  unfit  for  President  of  the  United  States  ; 
and  advised  his  withdrawal.  This  so  demoralized  the 
Democracy  that  Grant  had  an  easy  walk-over,  on  the  course. 
The  platform  on  which  Seymour  ran  called  for  quick  pay- 
ment of  the  debt  ;  and  in  paper  when  coin  was  not  stipulated 
in  the  bond ;  taxation  of  Government  bonds  ;  one  currency 
for  the  people,  the  bondholder,  office-holder,-  etc.  Of 
course,  our  Boss  Rothschild  would  not  stand  any  such 
nonsense  as  that ;  and  so  Belmont  was  ordered  to  order 
Manton  Marble  to  play  Benedict  Arnold  with  his  always-for- 
sale  World  just  before  election — just  on  the  eve  of  a  great 
battle  ;  and  Seymour  was  shelved.  It  is  an  interesting  fact 
that  Marble,  who,  not  long  before,  had  been  a  reporter  on 
the  Evening  Post  (and  who  had  run  the  World,  at  a  loss,  for 
various  masters),  now  suddenly  acquired  a  fine  brown-stone 
mansion  on  Fifth  Avenue,  and  all  that  that  implies.  Re- 
siding at  present  in  Paris,  he  occasionally  instructs  the 
American  public,  by  Orphic  oracles,  concerning  "  the  money 
question :  "  to  which  nobody  who  at  all  understands  it,  pays 
any  attention. 

Before  this  time,  Sherman,  Morton  and  other  leading 
Republican  Senators  had  opposed  coin  payment  of  the  bonds. 
They  were  bought  and  silenced  by  Grant's  election.  Then,  as 
we  shall  see,  came  "  The  Strengthening  Act."   Save  the  mark  ! 

The  great  economist  Wolowski  of  Paris  made  this  truth- 
ful prophecy  in  t868,  when  the  subject  of  demonetization 
of  silver  was  discussed.  He  said  that  if  that  were  done  : 
The  decline  in  prices  will  compel  nations  internationally  in- 
debted to  depart,  more  and  more,  from  the  principles  of  free 
trade  towards  a  policy  of  protection. 


OUR  MONEY  WARS. 


J43 


The  nations  of  the  world  will  be  divided  into  two  groups 
— the  one  trading  in  gold,  the  other  in  silver — and  this  con- 
dition will  render  commerce  precarious  and  unsafe. 

Throughout  the  world  a  decline  in  prices  will  follow,  in- 
jurious alike  to  owners  of  real  property  and  the  laboring 
classes,  and  advantageous  only — and  unjustly  so — to  the 
holders  of  State  bonds  and  similar  securities. 

One  of  the  principal  difficulties  in  this  period  of  general 
depression  will  be  that  the  people  will  look  for  its  causes  in 
all  possible  directions. 

The  advocates  of  the  gold  standard  will  offer  all  possible 
groundless  and  fantastic  excuses  or  reasons  of  a  secondary 
nature  only,  and  the  real  cause,  the  demonetization  of  silver, 
will  be  overlooked. 

There's  Millions  in  It. — The  speculators  of  the  gold 
exchange  for  years  kept  gold  up  that  they  might  buy  Green- 
backs cheap  ;  to  invest  in  bonds  at  par;  and  below  is  the 
result,  showing  the  year,  the  amount  of  Greenbacks  exchanged 
for  bonds,  and  the  amount  in  gold,  for  which  the  Greenbacks 
were  purchased  from  1862  to  1868  : 


Year. 

Bonds. 

Cost  in  gold. 

1862 

$   60,982,450 

$   44, 03 °> 649 

1863 

160,987,550 

101,890,850 

1864 

381,292,250 

189,697,636 

1865 

279,646,150 

208,2 14.090 

1866 

124,914,400 

88,59I-773 

1867 

421,469-55° 

3°3,2i5,3°3 

1868 

4255443'800 

312,826,323 

$1,854,736,150    $1,248,466,624 

Here  is  a  net  profit  of 606,269,526 

Add  interest  to  1880 1,430,000,000 


$2,036,269,526 

The  above  figures  are  taken  from  the  public  record,  and 
may  be  relied  upon. 

The  bondholders  have  received  back  more  than  twice  the 
value  they  loaned,  and  still  [1880]  hold  the  bonds  to  draw 
more  every  year,  until  they  mature  ;  when  they  expect  to  re- 
ceive their  face  in  gold,  or  keep  the  blister  drawing  until  it  is 
paid. 


144  OUR  MONEY  WARS. 

1869. 

Checks  on  Banks. — The  Act  of  February  19,  1869,  pro- 
vides that  National  banks  shall  not  loan  money  on  their 
own  notes ;  as  it  would  tend  to  create  a  scarcity  in  the 
money  market  by  locking  money  up.  Quite  a  patriotic  effort 
on  the  part  of  our  rulers  ! 


March  3,  1869,  Congress  passed  an  act  against  over- 
certification  by  banks.  The  banks  were  equal  to  the  oc- 
casion, as  usual ;  as  will  be  seen. 

The  Credit  Strengthening  Act. — President  Grant,  in  his 
Inaugural  of  March  4,  1869,  notified  the  public  that  he  would 
regard  all  who  did  not  favor  the  payment  of  the  5-20  bonds 
in  gold  as  repudiators,  who  need  not  expect  any  favors  from 
his  administration. 

March  11,  1869,  when  the  Credit  Strengthening  Act  was 
coming  up,  Governor  O.  P.  Morton  gave  this  last  gasp 
against  the  gold  bondage  :  "  I  am  anxious  to  have  the  bonds 
paid  in  gold  or  its  equivalent,  and  that  will  be  the  result 
when  we  return  to  specie  payments,  as  I  hope  we  soon 
shall.  But  when  I  am  asked  to  say  that  it  is  the  original 
law  of  the  contract  creating  some  of  the  bonds,  I  cannot  do 
it,  without  changing  my  convictions  as  to  the  construc- 
tion of  the  statutes,  which  I  have  entertained  from  the 
first." 

The  Act  of  March  18,  1S69,  called  "The  Credit  Strengthen- 
ing Act,"  demonetized  the  legal-tender  notes,  and  provided — 
contrary  to  the  laws  and  the  facts — that  both  legal-tender 
notes  and  5-20  bonds  were  payable  in  coin,  and  should  be  so 
paid.  By  this  act,  the  people  lost  and  the  capitalists  gained 
$500,000,000.  Large  books  have  been  written  on  the  5-20S, 
which  were  so  largely  affected  by  this  evil  legislation.  John 
G.  Drew  wrote  of  their  "  Origin  and  History."  He  opens 
thus  :  "  On  the  12th  of  March,  Mr.  Schenck,  of  Ohio  [better 
known  afterward  as  Poker  Schenck. — S.  L.],  introduced  a  bill 
into  the  House  which,  after  the  customary  game  of  battle- 
dore and  shuttlecock  with  the  Senate,  was  passed.  The 
same  bill  had  before  passed  Congress,  and  been  sent  to  the 
President  (Johnson) ;  but  he — whether  advised  that  Congress 
was  exceeding  its  province  in  invading  the  functions  of  the 
Supreme  Court  by  construing  law,  or  whether  he  considered 
it  as  a  sort  of  town-meeting  resolution,  we  don't  know — took 


OUR  MONEY  WARS.  145 

no  notice  of  it ;  and  thus  the  previous  action   lapsed  by  his 
default." 

Here  is  the  Act  of  1869,  as  approved  by  Grant : — 
An  A:t  to  Strengthen  the  Public  Credit  of  the  United  States : 
Be  it  enacted,  etc. :  That,  in  order  to  remove  any  doubt  as  to 
the  purpose  of  the  Government  to  discharge  all  its  obliga- 
tions to  the  public  creditors,  and  to  settle  conflicting  ques- 
tions and  interpretations  of  the  law,  by  virtue  of  which  such 
obligations  have  been  contracted,  it  is  hereby  provided  and 
declared  that  the  faith  of  the  United  States  is  solemnly 
pledged  to  the  payment  in  coin,  or  its  equivalent,  of 
all  the  obligations  of  the  United  States  not  bearing 
interest  known  as  United  States  notes,  and  of  all  the 
interest-bearing  obligations,  except  in  cases  where  the 
law  authorizing  the  issue  of  any  such  obligations  has  ex- 
pressly provided  that  the  same  may  be  paid  in  lawful  money, 
or  in  other  currency  than  gold  and  silver ;  but  none  of  the 
said  interest-bearing  obligations  not  already  due  shall  be  re- 
deemed or  paid  before  maturity,  unless  at  such  times  as 
United  States  notes  shall  be  convertible  into  coin  at  the  op- 
tion of  the  holder,  or  unless  at  such  time  bonds  of  the 
United  States,  bearing  a  lower  rate  of  interest  than  the  bonds 
to  be  redeemed  can  be  sold  at  par  in  coin.  And  the  United 
States  also  solemnly  pledges  its  faith  to  make  provision  for 
the  redemption  of  the  United  States  notes  in  coin. 

U.  S.  Grant. 
Approved  March  18,  1869. 

It  is  proof  positive  that  Europe  did  not  consider  the  5-20S 
coin  bonds,  that  on  Nov.  30,  1867,  they  were  sold  in  Lon- 
don at  7  of-  cents ;  while  New  Brunswick  and  Cape  of  Good 
Hope  six  per  cents  sold  at  105  ;  Russian  five  per  cents  at 
85,  and  Brazilian  five  per  cents  at  75. 


B.  S.  Heath  said  of  this  act  : — In  1869,  when  the  Credit 
Strengthening  Act  was  passed,  changing  the  payment  of 
the  bonds  from  Greenbacks  to  coin,  there  was  outstanding 
$1,500,000,000  of  5-20  bonds;  all  to  become  due  and  pay- 
able within  the  next  twelve  years.  At  that  time,  the  coin 
resources  of  the  Government  were  no  more  than  sufficient 
to  enable  it  to  meet  its  current  interest  obligations.  Never- 
theless, Congress  obligated  it  to  pay  $1,500,000,000  of  gold 
and  silver.  This  was  an  apparent  impossibility.  //  was 
10 


146  OUR  MONEY  WAR'S. 

intended  to  be  such.  The  Act  was  for  the  express  purpose  of 
immortalizing  the  public  debt  ;  that  it  might  never  be  paid. 

But  when  Nevada  opened  her  rich  vaults  of  silver, — and 
made  it  possible  to  pa)'  the  debt  in  accordance  with  the 
new  terms  imposed, — that  metal  was  demonetized,  and  pay- 
ment limited  to  gold.  It  may  seem  strange  to  some  that 
the  bondholders  should  desire  such  legislation  as  would 
absolutely  defeat  payment  to  them.  But  they  regarded  the 
bonds  as  the  best-paying  investment  into  which  they  could 
put  their  money. 

To  say  that  our  bonds  were  issued  and  sold  to  raise  money 
to  carry  on  the  war  is  absurd  and  false.  It  was  a  year  and 
a  half  after  they  were  authorized  before  they  were  put  upon 
the  market ;  and  when  they  were  offered  it  was  not  because 
the  Government  needed  the  money. 

Black  Fridav. — Warwick  Martin  says  : — The  run- 
ning up  of  gold  from  25  to  62^  on  Black  Friday,  in  Sept., 
1869,  and  the  crisis  of  1873,  were  immediately  caused  by 
the  banking  law  allowing  banks  at  money  centers  to  draw 
interest  on  the  deposits  of  country  banks.  The  money  is 
loaned  on  call  to  speculators,  who  cannot  respond  when  a 
scare  comes.  Secretary  Richardson  tried  to  have  a  law 
passed  preventing  this.     But  Wall  Street  prevailed. 

Up  to  1869,  the  sales  of  gold  had  been  made  by  the  Secre- 
taries of  the  Treasury  secretly  ;  but,  in  1869,  when  General 
Grant  became  President  and  Mr.  Boutwell  Secretary  of  the 
Treasury,  Congress  were  induced  to  authorize  notice  to  be 
given  of  the  time  when  gold  would  be  sold,  and  bonds  would 
be  purchased.  This  was  done  by  Mr.  Boutwell,  Mr. 
Richardson,  Mr.  Bristow,  and  Mr.  Morrill,  Secretaries  of  the 
Treasury.  Nothing  could  have  promoted  the  interest  of 
Wall  Street  better  than  this  law  and  the  practice  under  it. 
As  soon  as  notice  was  given  each  month,  the  gold  brokers 
commenced  reducing  the  premium  upon  gold  until  the  day 
when  the  sales  were  to  take  place.  On  that  day  gold  always 
ruled  low.  The  Secretary  received  the  lowest  price  for  this 
gold  sold.  On  the  day  following  his  sales  the  premium  on 
gold,  instead  of  going  down,  owning  to  said  sales,  always 
went  up.  The  brokers  sold  what  they  had  purchased  from 
the  Secretary  of  the  Treasury,  making  a  good  profit  thereon. 
In  this  way  and  by  these  means  the  Secretary  enabled  Wall 
Street  brokers  to  make  fortunes. 


OUR  MONEY  WARS.  147 

One  thing-  more  and  we  close.  In  Sept.,  1869,  when 
no  unusual  demand  for  gold  existed,  it  in  some  way  became 
known  that  the  Secretary  of  the  Treasury  did  not  intend  to 
sell  gold  that  month.  The  brokers  of  Wall  Street  thought  it 
a  proper  time  to  get  up  a  corner  on  gold,  as  though  some 
great  demand  therefor  existed.  From  day  to  day  and  week 
to  week  the,  rate  went  up  from  25  per  cent,  until  it  reached 
60  per  cent,  premium.  The  sales  by  the  Treasury  of  even 
one  or  two  millions  would  have  prevented  the  advance  of 
the  premium  ;  but  no  sales  were  made  until  the  premium 
went  up  to  60;  then  $5,000,000  were  sold,  and  in  one  hour 
the  premium  went  down  to  30.  Had  $10,000,000,  instead  of 
$5,000,000  been  sold,  the  premium  would  have  gone  much 
lower.     The  notes  could  easily  have  been  made  par. 

We  do  not  accuse  Mr.  Boutwell  of  any  combination  with 
Wall  Street  to  produce  this  state  of  things,  but  there  is  no 
doubt  that  some  one  very  high  in  position  was  in  that  com- 
bination, expecting  to  participate  in  the  profits.  This  com- 
bination prevented  sales  of  gold  from  taking  place  on  a  cer- 
tain day.     The  matter  should  have  been  fully  investigated. 

1870. 

The  Act  of  July  2,  1870,  increases  the  circulation  of 
National  banks  to  $354,000,000;  which  was  to  be  divided 
among  the  States,  according  to  population.  The  Act  of  1864 
had  limited  them  to  $300,000,000. 

The  Law  of  1870,  Providing  that  National  Banks 
might  Surrender  their  Circulation  and  Lift  and  Sell 
their  Bonds. — The  previous  legislation  relating  to  bonds 
and  National  banks  had  raised  the  price  of  bonds,  which 
cost  not  more  than  $40  coin  to  the  $100,  to  $120  and  $125. 
It  was  a  most  favorable  time  to  sell  5-20  bonds,  before  many 
of  those  issued  under  the  funding  laws  of  1870  and  1S71 
could  be  sold  and  the  5-2 os  called  in.  Consequently  Sher- 
man, who  had  charge  of  the  National  banks  in  the  Senate, 
placed  a  section  in  the  Act  of  1870,  which  provided  that  by 
placing  the  despised  legal-tender  notes  in  the  Treasury  to 
the  amount  of  the  circulation  of  the  banks,  they  could  lift 
and  sell  their  bonds,  and  the  Government  would  redeem  the 
bank  notes.  Two  objects  were  accomplished  by  this  pro- 
vision in  this  act,  The  National  banks,  thus  surrendering 
circulation,  sold  their  5-20  bonds,^which  they  would  sgort 


I48  OUR  MONEY  WARS. 

have  been  compelled  to  surrender  under  the  law  of  1870, — at 
a  premium  of  20  or  25  per  cent.,  and  were  prepared,  after 
making  a  large  sum,  to  supply  their  places  with  five  per  cent, 
bonds  at  par.  For  this  act  the  National  banks  should  feel 
grateful,  and  no  doubt  they  do.  Another  object  of  this  pro- 
vision of  the  act  was,  to  lock  up  the  legal-tender  notes  in 
the  Treasury,  and  to  keep  the  National-bank  notes  out ;  and 
thus  reduce  the  circulation  of  the  country,  and  especially  of 
the  legal  tenders.  Another  legal  device  to  contract  the 
currency — and  especially  the  legal-tender  notes — was  to 
provide  that  when  National  banks  failed,  and  their  bonds 
were  sold  by  the  Government,  the  money  (not  in  coin  for 
which  the  bonds  were  sold,  but  in  legal-tender  notes)  should 
be  deposited  in  the  Treasury,  to  redeem  the  notes  of  the 
failed  banks.  This  reduced  the  quantity  of  legal-tender 
notes  out  in  the  business  of  the  country,  but  kept  the  Na- 
tional-bank notes  out  among  the  people,  until  the  Govern- 
ment saw  proper  to  pay  out  the  legal  tenders  deposited  for 
their  redemption.  It  will  be  seen  that  every  move  made 
tended  to  the  carrying  out  of  the  original  intention  of  Mr. 
Sherman, — as  stated  in  his  speech  of  February,  1863, — to 
retire  the  legal-tender  notes,  and  to  substitute  National-bank 
notes  in  their  place. 

In  1870  and  187 1,  the  six  per  cents  were  worth  20  per  cent, 
premium  in  Greenbacks  ;  which  were  n  per  cent,  below  coin. 
Under  the  above  act,  the  banks  sold  about  $300,000,000  of 
5-20  bonds, — they  having  at  the  time  $400,000,000 ;  includ- 
ing some  at  five  per  cent,  interest.  20  per  cent,  on  $300,000,- 
000  is  $60,000,000 — a  neat  profit. 

The  Great  Refunding  Act. — The  Act  of  July  14,  1870, 
authorized  the  issue  and  sale  of  $1,500,000,000  United  States 
bonds,  to  refund  the  5-20S  :  200  million  at  five  per  cent.; 
300  million  at  four  and  a  half  per  cent.,  and  1,000  million  at 
four  per  cent.,  interest  and  principal  in  "  coin."  This  loan 
was  intended  to  be  raised  in  Europe, — especially  among  the 
English,  who  had  been  so  hostile  to  us  during  the  war  ;  and 
then  bought  Confederate  bonds  at  a  premium,  while  refusing 
ours.  We  did  not  need  to  borrow — the  Government  having 
an  annual  income  of  300  million.  We  could  have  borrowed 
any  amount  at  home,  at  five  per  cent.  The  country  was 
tolerably  prosperous.  The  5-2 os  were  not  due.  Large 
quantities  of  them  were  in  50s  and  100s;  which  were  dis- 


OUR  MONEY  WARS.  149 

tributed  among  the  people  of  small  means  ;  and  were  to  them 
the  same  as  money; — bearing  interest  when  they  did  not  need 
money,  and  always  salable  at  par,  or  above  par  for  legal 
tenders.  It  was  a  great  hardship  for  the  people  to  surren- 
der these  bonds  for  the  benefit  of  native  and  foreign  capi- 
talists. We  got  no  foreign  coin  for  them  :  England  took 
care  to  prevent  that. 

The  Supreme  Court  and  the  Legal  Tender. — In 
1870  the  Supreme  Court  decided — by  a  vote  of  five  to  three 
— that  Congress  had  no  constitutional  power  to  make  its 
notes  legal  tender  in  the  payment  of  pre-existing  debts.  A 
change  in  the  composition  of  the  court  resulted,  in  187 1,  in 
a  reversal  of  this  decision  by  a  majority  of  one.  In  1884, 
unenlightened  public  opinion  was  only  represented,  as  will 
be  seen,  in  this  court  by  Judge  Field  of  California. 

"  God-made  "  Money. — For  the  purpose  of  setting  some 
thoughtless  people  right  on  the  question  of  intrinsic  value  in 
money,  we  quote  from  the  famous  case  of  Knox  vs.  Lee,  in 
the  United  States  Supreme  Court  in  187 1.  After  deciding 
that  Congress  had  full  constitutional  right  to  authorize  the 
issue  of  legal  tender  money,  the  court  said  : — 

Here  we  might  stop  ;  but  we  will  notice  briefly  an  argu- 
ment presented  in  support  of  the  position  that  the  unit  of 
money_  value  must  possess  intrinsic  value.  The  argument  is 
derived  from  assimilating  the  constitutional  provision  re- 
specting a  standard  of  weights  and  measures  to  that  confer- 
ring the  power  to  coin  money  and  regulate  its  value.  It  is 
said  there  can  be  no  uniform  standard  of  weights  without 
weight,  or  of  measure  without  length  or  space,  and  we  are 
asked  how  anything  can  be  made  a  standard  of  value  which 
has  itself  no  value.  It  is  hardly  correct  to  speak  of  a  stand- 
ard of  value.  The  Constitution  does  not  speak  of  it.  It 
contemplates  a  standard  for  that  which  has  gravity  or  exten- 
sion, but  value  is  an  ideal  thing.  The  coinage  acts  fix  its 
unit  as  a  dollar,  but  the  gold  or  silver  thing  we  call  a  dollar 
is  ih~Tfb  sense  a  standard  of  a  dollar.  It  is  a  repre- 
sentative of  it.  There  might  never  have  been  a  piece  of 
money  of  the  denomination  of  a  dollar.  There  never  was  a 
pound  sterling  coined  until  1815,  if  we  except  a  few  coins 
struck  in  the  reign  of  Henry  VII.,  almost  immediately  de- 
based, yet  it  has  been  the  unit  of  British  currency  for  many 
generations. 


IS° 


OUR  MONEY  WARS. 


The  court  further  said  : — 

The  States  can  no  longer  declare  what  shall  be  money  or 
regulate  its  value.  Whatever  power  there  is  over  the  cur- 
rency is  vested  in  Congress.  If  the  power  to  declare  what 
is  money  is  not  in  Congress,  it  is  annihilated.  *  *  *  The 
Constitution  does  not  ordain  what  metals  shall  be  coined,  or 
prescribe  that  the  legal  value  of  the  metals,  when  coined, 
shall  correspond  at  all  with  their  intrinsic  value  on  the 
market.  Nor  does  it  even  affirm  that  Congress  may  declare 
anything  to  be  a  legal  tender  for  the  payment  of  debts.  Con- 
fessedly the  power  to  regulate  the  value  of  money  coined, 
and  of  foreign  coins,  is  not  exhausted  by  the  first  regulation. 
More  than  once  in  our  history  has  the  regulation  been 
changed  without  any  denial  of  the  power  of  Congress  to 
change  it,  and  it  seems  to  have  been  left  to  Congress  to  de- 
termine alike  what  shall  be  coined,  its  purity,  and  how  far  its 
statutory  value  as  money,  shall  correspond,  from  time  to 
time,  with  the  market  value  of  the  same  metal  as  bull- 
ion. *  *  * 

No  one  ever  doubted  that  a  debt  of  $1,000,  contracted  be- 
fore 1834,  could  be  paid  by  100  eagles  coined  after  that  year, 
though  they  contained  no  more  gold  than  94  eagles  such  as 
were  coined  when  the  contract  was  made,  and  this,  not  be- 
cause of  the  intrinsic  value  of  the  coin,  but  because  of  its 
legal  value.  The  eagles  coined  after  1834  were  not  money 
until  they  were  authorized  by  law,  and  had  they  been  coined 
before  without  a  law  fixing  their  legal  value,  they  could  have 
no  more  paid  a  debt  than  uncoined  bullion  or  cotton  or 
wheat. 

[In  view  of  the  fact  that  a  full  bench  of  the  Supreme  Court 
in  1 8S4  reaffirmed  this  decision,  one  would  think  that  intrin- 
sic-value people  would  be  afraid  to  go  before  the  public  with 
such  foolish  statements  as  "God  made  money."] 

Repeal  of  the  Income  Tax  (Statutes  16,  p.  256)  oc- 
curred in  1870.  So  long  as  this  tax  existed,  it  compensated, 
to  some  extent,  for  the  failure  to  tax  bonds.  The  bond- 
holders were  taxed  upon  the  income  derived  from  the  interest 
on  their  bonds.  This  was  the  most  just  and  equitable  tax 
ever  imposed  :  but  as  it  came  from  the  rich  and  not  from 
the  poor,  Congress,  ever  careful  of  such,  kindly  repealed  the 
law  applying  to  incomes,  legacies  and  successions  in  1870 — 
to  take  effect  in  1872.    This  tax  was  upon  railroads,  banks, 


OUR  MONEY  WARS.  15 1 

bondholders,  capitalists  and  corporations.     But  this  was  re- 
pealed, and  those  upon  the  industries  left  standing. 

More  Wealth  in  Ten  Years  than  in  250  Previous. — 
The  wealth  of  this  country  had  greatly  increased  by  1870;  in 
spite  of  all  drawbacks.  The  Rural  World  said,  soon  after 
that  date,  quoting  the  census  : — In  round  numbers,  the  en- 
tire net  wealth  of  the  nation — produced  by  all  the  labor  ex- 
pended from,  the  day  the  Pilgrims  landed  upon  Plymouth 
Rock  to  the  year  i860 — was  15  billions.  The  combined 
wealth  in  1870  was  30  billions.  More  wealth  was  created  from 
i860  to  1870,  during  the  Greenback  reign,  than  during  the  en- 
tire history  of  the  country  before  that ;  when  we  were  hobby- 
ing  along  upon  a  gold  basis  theory.  The  estimates  in  i860 
include  the  millions  in  human  chattels  which  were  extin- 
guished-before  1870  ;  and  during  the  decade  from  i860  to 
.1870  we  had  a  destructive  war,  in  which  hundreds  of  thous- 
ands of  men  were  engaged  in  destroying  wealth  instead  of 
producing  it. 

1871. 

The  Act  of  January  20,  187 1,  made  interest  on  the  five 
per  cents,  payable  quarterly  [See  July,  1870]  and  added 
$300,000,000  to  them. 

The  Three-sixty-five  Bonds. — November  9,  1S71,  Hor- 
ace Greeley  gave,  in  the  New  York  Tribune,  an  exposition  of 
the  famous  3-65  bond  plan,  which  is  considered  a  very  good 
statement.  As  the  plan  is  now  obsolete,  it  need  not  be  re- 
hearsed. If  the  grand  old  man  were  now  alive,  he  would  be 
with  the  vanguard  of  reform — trying  to  cut  down  "  interest, 
rent,  and  speculative  profit,"  to  the  lowest  possible  point. 

Most  people  think  that  Greeley's  nomination  to  the  Presi- 
dency in  1872  was  a  mistake.  But  here  is  what  Bishop  J. 
W.  Hood  said  of  it  in  1884  :  "  The  nomination  of  Greeley 
took  the  poison  out  of  Southern  sentiment ;  and  a  fearless,  up- 
right man  can  now  win  the  respect  of  the  people  and  work 
his  way  without  difficulty." 

Carpet-bag  Debts. — The  following  from  the  New  York 
World  of  1879,  gives  a  dark  picture  of  carpet-bag  debts  in 
the  South,  in  187 1  : — Now  that  we  have  heard  so  much  about 
Southern  State  debts,  suppose  we  cite  a  few  figures  which 
were  in  circulation  seven  or  eight  years  ago,  and  then  pro- 
voked not  a  little  comment.  They  showed  the  debt  and  con- 
tingent liabilities  of  the  States  in  1861  before,  and  again  in 


!52 


OUR  MONEY  WARS. 


187 1  after  they  had  experienced  the  blessings  of  civil  war, 
reconstruction  and  carpet-bag  government.  Inasmuch  as 
these  States  were  compelled  to  repudiate  such  indebtedness 
as  they  had  incurred  for  the  purposes  of  war,  the  increase 
was  exclusively  clue  to  the  Republican  carpet-baggers,  who 
were  not  satisfied  with  stealing  all  that  had  been  left  to 
the  people  after  four  years  of  war,  but  undertook  to  approp- 
riate in  advance  the  earnings  of  the  South  for  the  next  gener- 
ation. 

Debts  and  Liabilities. 


State  Old. 

Alabama $7,945,000 

Arkansas 2,084,179 

Florida 370,617 

Georgia 2,670,750 

Louisiana 1 1,000,000 

Mississippi None 

North  Carolina.  .  12,689,245 

South  Carolina.  .  4,407,958 

Texas 2,000,000 

Virginia 33,248,141 


New. 
$52,761,917 
19,398,000 

IS?797,587 

42,560,500 
40,021,734 
1,697,431 
34,387,464 
22,480,516 
14,930,000 
47,090,866 


Increase. 
$44,816,917 

15,426,970 
39,889,750 

29,021, 734 
1,697,431 
22,198,219 
18,072,556 
12,930,000 
13,842,725 


$76,4i5,890     $291,626,015     $215,210,125 

It  seems  to  us  but  yesterday  that  Mr.  Schurz,  who  was 
then  a  Reformer,  was  grieving  over  the  spectacle  of  these 
down-trodden  and  scientifically  plundered  States  ;  and  that 
even  the  Tribune  had  to  shake  its  head  at  Spencer.  And 
now  ! 

French  Paper  Money. — In  the  "  Cyclopedia  of  Money 
and  Finance  "  I  have  partly  shown  that  France's  great  vic- 
tory over  Germany  in  the  payment  of  three-quarters  of  the 
billion  dollar  indemnity  by  German  bills  of  exchange,  was 
principally  due  to  the  fact  that  the  French  rulers,  right  after 
the  war,  flooded  the  country  with  paper  money,  and  thus 
pushed  all  the  industries,  and  made  French  goods  cheaper 
than  German.  The  wrriter  of  the  following,  Ivan  C.  Michels, 
gets  a  glimpse  of  this  in  the  italic  part.  Flis  figures  are  an 
interesting  corroboration  of  the  great  claim  we  Greenbackers 
have  always  made  for  French  financiering  : — 

The  indemnity  from  France  to  Germany  after  the  war  of 


OUR  MONEY  WARS. 


*S3 


1870-71,  including  interest  at  five  per  cent,  per  annum, 
amounted  to  $1,060,209,015.  After  crediting  France  with  the 
value  of  certain  railroads  in  Alsace  and  Lorraine,  the  amount 
of  indemnity  due  Germany  was  $998,172,069,  or  4,990,860,- 
349  francs,  which  was  paid  by  the  French  Government 
through  the  Bank  of  France.  At  my  request,  the  Bank  of 
France  furnished  to  me  several  years  ago  the  following 
statement  as  to  the  mode  of  having  paid  said  indemnity  : 

Francs. 

In  bank-notes  of  the  Bank  of  France 125,000,000 

In  French  gold  coins 273,003,050 

In  French  silver  coins 239,291,875 

In  German  bank-notes 105,039,045 

Bills  of  exchange  drawn  in  thalers 2,485,513,729 

Bills  drawn  on  Frankfurt  in  florins 235,128,152 

Bills  drawn  on  Hamburg  in  marksbancs 265,216,990 

Bills  drawn  on  Berlin  in  reichsmarks 79,072,309 

Bills  drawn  on  Amsterdam  in  florins 250,540,821 

Bills     drawn    on    Antwerp    and    Brussels     in 

.francs 295,704,546 

Bills  drawn  on  London  in  pounds  sterling.  .  .  .  637,349,832 

Total  francs 4,990,860,349 

Equal  to  $998,172,069,  the  dollars  reckoned  at  five  francs. 

The  patriotic  people  of  France  raised  the  vast  sum  by  a 
loan  in  less  than  six  months  from  the  time  the  Government 
appealed  to  them.  Germany  expected  to  receive  for  years 
to  come  5  per  cent,  per  annum  on  the  indemnity  bond  ;  but 
the  Bank  of  France,  through  the  French  bankers,  drew  on 
Germany,  England,  Scotland  and  Belgium,  and  in  four 
months  time  the  whole  indemnity  was  paid.  Never  in  the 
history  of  the  world  has  this  financial  transaction  been 
equaled,  and  I  doubt  that  any  other  banking  institution  could 
have  succeeded  so  well  as  the  Bank  of  France.  Germany 
expected  the  payment  in  gold  coin  or  bullion,  having  pre- 
viously and  purposely  demonetized  silver  ;  but  the  fact  re- 
mains that  actually  in  gold  only  273,003,050  francs,  equal  to 
$54,600,610,  were  paid  by  the  Bank  of  France,  and  that  sum 
only  left  France,  was  remelted  in  Germany  and  coined  into 
reichs-marks.  England,  with  her  gold  standard,  had  to  part 
with  her  gold  to  the  amount  of  637,349,832  francs,  equal  to 


J54 


OUR  MONEY  WARS. 


$127,469,964.  Bills  of  exchange  on  the  German  bankers 
throughout  the  German  empire,  especially  on  Hamburg,  Ber- 
lin and  Frankfurt,  amounted  to  3,064,931,180  francs,  equal 
to  $612,986,236,  nigh  on  two-thirds  of  the  whole  amount  of 
the  indemnity.  This  magnificent  stroke  of  finance  on  the 
part  of  the  Bank  of  France  and  the  French  bankers  came 
near  ruining  the  leading  German  bankers,  and  forty-one 
banking  houses  throughout  the  German  Empire  had  to  sus- 
pend temporarily,  not  being  able  to  honor  the  drafts  made 
upon  them.  The  extravagance  0/  the  German  people  during 
the  war  of  1870-71  brought  than  into  debt  to  France  for  luxu- 
ries, wines,  etc.,  to  an  enormous  extent,  and  when  the  Bank 
of  France  purchased  bills  of  exchange  from  the  French 
bankers,  who  drew  on  their  German  correspondents,  a  panic 
ensued,  and  the  Germans  suffered  far  more  than  it  is  gener- 
ally believed. 

Credit  Mobilier  and  Tweed  Ring. — In  187 1,  the  Credit 
Mobilier  at  Washington,  and  the  Tweed  Ring  at  New  York, 
were  exposed. 

1872. 

Earnings  in  Production  and  in  Banking. — John  G. 
Drew  gives  the  following  comparison  of  American  earnings 
in  production  and  in  banking  in  1872  : — 

The  average  increase  of  our  earnings  is  three  and  a  half  per 
cent.  The  Comptroller  of  the  Currency,  in  his  report  of  De- 
cember, 1872,  shows  the  net  earnings  of  National  banks  to  be 
10  and  a  third  per  cent.  Add  to  this  rent,  salaries,  etc.,  it 
would  be  15  per  cent.  Street  rates  are  doubtless  20  per 
cent.  Net  earnings  of  banks,  for  year  ending  Aug.  31,  1872, 
are:  Milwaukee,  17.93;  Iowa,  17.70;  Minnesota,  14.36; 
Missouri,  18.14;  Kansas,  15.89  ;  Nebraska,  14.02;  Oregon 
36.10;  Utah,  49.36;   Idaho,  38.87*;  Montana,  24.30. 

With  three  percent,  earnings  and  20  per  cent,  taken  by  the 
money-lenders,  it  follow  that  the  people  who  are  borrower  sink 
17  percent,  a  year.  This  would  bring  the  cleaning-out  panic 
once  in  six  years.  As  all  do  not  borrow,  the  panic  comes 
about  once  in  ten  years. 

Preparing  for  the  Panic. — The  N.  Y.  Tribune,  in  1875, 
shows  how  bravely  we  were  preparing  for  the  panic  in  1872  : 
— From  October,  1865  to  Oct.  1872,  the  following  changes 
took  place  in  the  principal  items  of  the  balance  sheets  of  the 
National  banks  : 


OUR  MONEY  WARS.  155 

1865  1872 

Private  Loans  and  Discounts.  $487,170,000  $877,198,000 

United  States  Bonds 427,731,000  409,669,000 

Loans  to  Banks  and  Brokers,  107,372,000  128,181,000 

Stocks 19,049,000  23,533,000 

Paper  Money  and  Specie 224,308,000  147,140,000 

Circulation 171,322,000  333,495,000 

Individual  Deposits 500,911,000  613,290,000 

United  States  Deposits 48,170,000  12,418,000 

Due  to   Banks 174,200,000  144,836,000 

Capital  Paid  in 393,157,000  679,929,000 

The  above  table  shows  that  the  banks  took  up  the  business 
of  inflation  when  the  Government  dropped  it:  that  they  in- 
creased their  loans  and  discounts  80  per  cent.,  at  the  same 
•time  diminishing  their  cash  reserve  more  than  one-third  : 
and  also  diminishing  their  United  States  bonds,  while  in- 
creasing their  liabilities  to  depositors,  and  nearly  doubling 
their  circulation. 

Apotheosis  of  Jay  Gould. — About  twenty  years  ago, 
Jay  Gould  was  the  N.  Y.  Sun's  "  master  thief."  In  those 
days  it  could  not  chide  in  sufficiently  strenuous  terms,  Reid 
of  the  Tribune  as  "  Jay  Gould's  boy."  Long  after  the  big 
Tribune  building  was  erected,  the  little  Sun  hung  like  a 
hornet  upon  its  flank.  But  times  change.  The  Sun  now 
has  excuses  for  and  praise  of  Gould,  as  a  "  great  man."  And 
Dana  has  long  been  on  fraternal  terms  with  Reid.  As  the 
Sun's  condemnation  of  Gould  is  still  fresh  in  the  average 
memory,  I  go  back  still  further,  and  present  the  Tribune's 
diatribes  upon  him,  years  before  he  became  the  owner  of 
that  paper, — as  a  fitting  and  touching  contrast  to  the  Sun's 
present  defence  [1889],  and  its  terrible  fulminations  against 
young  Ives — as  the  real  "master  thief"  of  the  age.  Here  is 
an  abstract  of  what  I  find  in  the  N.  Y.  Tribune,  Nov.  26, 
1872.  It  is  given  as  "  a  story  worth  repeating,"  so  I  repeat 
it.  It  tells  how  Gould  persuaded  Daniel  Drew  to  join  him 
in  a  raid  on  Erie,  and  unloaded  on  Drew — as  that  worthy 
had  often  served  his  confederates.  The  Tribune  editorial 
says  :  "  We  can  watch  with  composure  the  robbing  of  Mr. 
Drew  by  Mr.  Gould  ;  and  we  shall  look  on  with  equal  com- 
posure when  Mr.  Drew  gets  his  turn.  *  *  But  the 
outside  innocents  are  ground  to  powder.     *     *     Poor  clerks 


156  OUR  MONEY  WARS. 

who  had  staked  a  few  spare  hundreds  on  the  great  lottery, 
in  the  hope  of  adding  something  to  their  scanty  salaries  ; 
tradesmen  who  had  risked  their  savings  ;  professional  men 
who  had  expected  to  win  enough  in  Wall  Street  to  buy 
Christmas  presents  for  wife  and  children,  or  to  pay  the 
New  Year's  bills, — were  the  victims.  *  *  Mr.  Gould  was 
merciful.  He  took  all  they  had,  and  excused  them  from 
paying  the  rest." 

Another  editorial  from  the  same  paper,  just  after  Stokes 
shot  Fisk.  Describing  the  course  of  the  Fisk  and  Gould 
ring,  the  Tribune  said  : — They  taught  the  world  that  be- 
fore their  money,  their  effrontery  and  their  ingenuity,  courts 
were  powerless  and  law  was  a  mockery.  Almost  every  step 
in  their  career  was  upon  a  broken  statute.  They  subsidized 
judges  of  the  Supreme  Court  to  assist  them  in  the  illegal  over- 
issue of  stock  by  which  they  first  got  a  standing  in  the  mar- 
ket. They  used  the  writ  of  injunction  in  so  scandalous  a 
manner,  in  protecting  this  over-issue,  that  men  began  to 
believe  it  would  be  better  for  the  public  if  cx-parte  proceed- 
ings in  equity  were  abolished  altogether.  When  the  officers 
of  the  railway  company  were  enjoined  from  issuing  the  dis- 
puted certificates,  Mr.  Fisk  stole  them,  and  threw  them  on 
the  market.  When  attachments  issued  for  this  gross  contempt, 
the  whole  board  of  directors  ran  to  Jersey  City  with  their 
money  and  their  concubines.  From  across  the  ferry  they 
shouted  defiance  at  judges  and  laws  ;  and  organized  gangs  of 
mercenaries  to  keep  guard  about  the  tavern  which  they  called 
their  fort.  They  maintained  this  attitude  for  weeks ;  and  when 
they  were  ready  to  divide  their  plunder  with  the  speculators 
on  this  side  of  the  river,  they  made  their  bargain,  came  over 
in  broad  daylight,  and  laughed  at  the  Supreme  Court.  We 
have  more  than  once  told  the  history  of  this  shameful  pro- 
ceeding ;  by  which  the  road  was  first  robbed  of  $9,000,000, 
and  then  handed  over  to  Fisk  and  Gould  as  their  personal 
property.  And  what  became  of  the  order  of  arrest  ?  Why, 
Judge  Barnard  put  it  in  his  pocket,  and  entered  the  service 
of  the  men  against  whom  it  had  been  issued. 

The  degradation  of  the  bench  was  now  complete.  At 
Fisk's  call,  Barnard  left  his  mother's  death-bed,  in  Pough- 
keepsie,  to  sign  outrageous  ex-parte  orders  (if,  indeed,  his 
signature  was  not  fraudulently  affixed  afterward)  in  the  apart- 
ments  of   Fisk's    mistress.     At  Fisk's  order,  the   telegraph 


OUR  MONEY  WARS.  157 

was  used  to  serve  writs  in  Albany,  purporting  to  be  issued  in 
New  York.  At  Fisk's  demand,  when  the  great  gold  con- 
spiracy broke  down,  28  injunctions  were  sued  out  to  save  the 
conspirators  from  the  consequences  of  their  ruined  enter- 
prise;  and  men  whom  they  had  swindled  were  forbidden  to 
appear  in  court,  except  in  the  character  of  criminals.  At 
Fisk's  behest,  when  the  English  attempted  to  save  their 
depreciating  property,  Barnard  seized  60,000  shares  of  stock, 
and  placed  them  virtually  in  Fisk's  hands,  to  be  voted  with 
and  canceled.  At  Fisk's  order,  the  Supreme  Court  became 
a  tool  of  the  Erie  Company,  in  its  raid  upon  the  Albany  and 
Susquehanna  road  ;  and  persecuted  Ramsey  with  injunctions 
and  fraudulent  actions  ;  which  have  only  been  dropped  since 
the  death  of  their  prime  mover.  And  as  corruption  on  the 
bench  spreads  downward,  and  destroys,  in  time,  the  moral 
dignity  and  purity  of  the  bar,  so  it  was  possible  for  these 
vulgar  rogues  to  use  as  the  instruments  of  their  misdeeds  a 
distinguished  advocate  whose  sense  of  honor  had  been  de- 
scribed as  Quixotic. 

Germany  Kicks. — 840  business  associations  of  Germany, 
largely  agricultural,  petitioned  that  Government,  in  1872,  to 
return  to  the  silver  standard. 

A  Warning  Silver  Prophet.* — Gen.  A.  J.  Warner,  in  1S79, 
quoted  in  Congress  the  following,  as  the  utterance  of  Ernest 
Seyd,  the  English  economist,  in  1872.  This  shows  what 
strong  warnings  the  world  had  about  silver  : — -The  demone- 
tization of  silver,  abstracting  say  40  per  cent,  from  mediums 
of  exchange, — or  rather  the  violation  of  the  contract  basis 
upon  which  these  relations  now  rest, — will  be  tantamount  to 
a  gratuitous  addition  to  the  power  of  invested  capital  and 
fixed  income ;  while  labor  and  property  will  fall  in  value. 
Whether  the  result  takes  place  suddenly  or  gradually  (as 
the  advocates  of  the  gold  valuation  put  in  for  an  excuse),  the 
principle  involved   remains  the   same.     The  wrong  remains 

*  A  mystery  still  unexplained  in  1893  hangs  over  the  man  Ernest 
Seyd.  He  appears  as  a  sort  of  Dr.  Jekyll  and  Mr.  Hyde  in  our  finances. 
I  have  sometimes  thought  the  names  Seyd  and  Loyd  have  been 
mixed  in  somebody's  manuscript.  Here  now  we  have  Ernest  Seyd  as  a 
very  wise  bi-metalist,  and  again  we  have  an  Ernest  Seyd  appearing  with 
a  half  million  of  dollars  to  buy  up  our  Congress  and  get  silver  demone- 
tized in  1873. 

Will  somebody  explain  ?  Did  the  Shylock-Sherman  combine  seduce 
him  ? 


158  OUR  MONEY  WARS. 

paramount.  Thus  the  value  of  all  State  debts  (in  themselves 
immoral)  would  increase  greatly;  the  burden  of  taxation 
would  become  the  heavier  in  proportion ;  and  labor  would 
become  more  enslaved  than  ever.  There  are  persons  who 
allege  that  the  additional  supply  of  gold  might  soon  make  up 
the  difference.  The  folly  of  this  assertion  equals  that  of  a 
man  who  wantonly  scuttles  his  ship,  in  the  hope  and  expecta- 
tion that  he  might  get  another  to  replace  it. 

England's  Five  Billions  of  Credit  Money. — The  credit 
money  of  England  was  reckoned  at  five  billion  dollars  in  1872, 
as  follows  : — An  English  writer  quoted  by  Henry  Carey  Baird 
gives  these  figures  in  dollars  : 

Gold  and  silver  in  Great  Britain $339,500,000 

Circulation  of  Bank  of  England  notes 166,500,000 

Other  bank-notes  in  Great  Britain  in  1872 85,425,000 

$59X>4*S*000 

R.  H.  I.  Palgrave  says  that  the  deposits  of  the  British 
banks  were,  in  1871, — $2,900,000,000.  He  estimates  from 
sales  of  stamps  for  bills  payable,  their  average  amount  at  any 
one  time  as  $1,200,000,000.  He  estimates  the  private  or 
other  debts, — for  which  no  bills  are  given  by  nobility  and 
gentry, — at  the  same  figures.     So  we  have 

Bank  deposits $2,900,000,000 

Bills  of  exchange    1,200.000,000 

Private  debts 1,200,000,000 

$5,300,000,000 

All  this  is  payable  on  demand  by  the  less  than  600  million  of 
money. 


O  UK  MONEY  11  A  AS. 


159 


CHAPTER    XIV. 

1873  to  1880. 

SEVEN  YEARS  OF  FAMINE  IN  A  LAND  OF  PLENTY. 

1873. 

The  Demonetization  of  Silver. — The  first  great 
financial  event  of  1873,  is  one  that  should  make  those  who 
caused  it  feel  very  small— namely — the  demonetization  of 
silver  on  February  12. 

The  recent  utterance  of  the  able  Peoria,  111.,  Journal,  makes 
a  good  opening  on  this  question.     It   said,  in    substance: — 

On  December  16,  1872,  a  bill  relating  to  mints,  assay 
offices  and  coinage  was  reported  to  the  House  from  the 
Senate  by  Sherman.  It  had  been  prepared  two  years  before, 
by  the  agent  of  the  foreign  bankers,  the  New  York  Chamber 
of  Commerce  and  John  J.  Knox, — who  was  then  Comptroller 
of  the  Currency.  It  provided  for  a  thorough  change  in  our 
silver  coinage  ;  on  a  plea  of  equalizing  it  with  that  of  France. 
The  real  object  was  to  drop  the  silver  dollar.  Sherman 
said  the  bill  had  passed  the  Senate,  at  its  last  session  ;  and 
he  proposed  to  modify  only  a  single  section.  He  wished  the 
Senate  to  pass  it  without  reading.  Senator  Casserly  of 
California  opposed  the  bill.  It  was  ordered  printed  and 
read.  When  it  was  put  upon  its  passage  in  the  Senate, 
January  i7}  1873,  Sherman  added  17  amendments  to  it 
instead  of  one.  The  House  disagreed  with  his  amendments  ; 
and  then  he  made  his  favorite  movement  for  a  conference 
committee,  with  himself  at  its  head.  When  he  had  con- 
vinced the  committee  that  they  did  not  know  anything  about 
the  coinage  system  of  the  United  States,  he  introduced  the 
following  amendment,  which  was  passed  :  "That  any  owner 
of  silver  bullion  may  deposit  the  same  at  any  mint,  to  be 
formed  into  bars  or  into  dollars  of  420  grains  troy,  desig- 
nated as  trade  dollars,  and  no  deposit  of  silver  for  of  Iter  coinage 
shall  be  received."     These  are  the  few  lines  that  abolished  the 


^o  OUR  MONEY  WARS. 

coinage  of  the  old  412^- grain  silver  dollar.  Mr.  Sherman 
was  anxious  to  have  free  coinage  for  the  Chinese,  but  not  a 
single  dollar  for  the  people  of  this  country  ;  although  they 
were  involved  in  a  debt  of  over  $2,000,000,000  occasioned 
by  the  war  of  the  Rebellion ;  to  say  nothing  of  municipal, 
township,  county  and  State  indebtedness.  At  the  time  that 
silver  was  degraded  there  was,  all  told,  according  to  the  re- 
ports of  the  different  Secretaries  of  the  Treasury,  less  than 
$2,000,000  of  silver  in  the  Treasury,  and  only  about 
$5,000,000  in  private  and  National  banks,  and  in  the  hands 
of  private  individuals. 

Senator  Jones  of  Nevada  said  in  1890  : — And  again  in  1873, 
when  all  bonds  provided  for  by  the  Refunding  Act  of 
1870  had  been  sold,  and  had  passed  out  of  the  hands  of  the 
Government,  another  act  was  passed,  intended  by  the  money- 
lenders again  to  strengthen  the  public  credit  ;  and  again  to 
the  disadvantage  of  the  people,  and  to  the  exclusive  and  en- 
ormous advantage  of  the  bond-holders.  It  bore  the  innocent 
title  of  "  an  act  revising  and  amending  the  laws  relative  to 
the  mints,  assay  offices  and  coinage  of  the  United  States." 
This  act,  bearing  on  its  face  no  suggestion  of  any  change 
more  serious  than  that  of  regulating  the  petty  details  of 
mint  management, — has  proved  to  be  an  act  of  momentous 
consequence  to  the  people  of  this  country.  This  is  the  act 
that  demonetized  the  silver  dollar  ;  which  it  did  by  me?-ely 
omitting  that  coin  from  the  enumeration  of  the  coins  of  the 
United  States. 

Ernest  Seyd. — Another  writer  says  :  The  English  capital- 
ists raised  $500,000  and  sent  one  Ernest  Seyd  to  America  to 
have  silver  demonetized.  He  came.  In  the  bill  was  skillfully 
inserted  the  clause  demonetizing  silver.  Before  the  bill 
passed  a  member  of  the  committee  which  had  it  in  charge 
stated  that  : 

"  Ernest  Seyd  of  London,  a  distinguished  writer  and 
bullionist,  who  is  now  here,  has  given  great  attention  to  the 
subject  of  mint  coinage.  After  having  examined  the  first 
draft  of  this  bill,  he  has  made  various  sensible  suggestions 
which  the  committee  adopted  and  embodied  in  the  bill. 
Congressional  Record,  April  9,  1872." 

The  money  kings  of  the  world  knew  what  they  were  about. 
They  had  determined  to  control  and  enslave  labor  by  means 
of  their  control  of  the  world's  money.     They  had  determined 


OUR  MONEY  WARS.  161 

not  only  to  preserve  the  barbaric  idolatry  for  metal  money, 
but  concentrate  that  idolatry  on  gold  alone.  Gold  was 
brilliant  and  fascinating  in  color,  it  was  heavy,  but  not  bulky. 
It  could  be  easily  transported  or  hoarded.  Silver  should  be 
stricken  down,  and  half  the  money  metal  of  the  world  be 
made  a  mere  commodity  like  iron. 

Gen.  Warner  said  in  1879  : — Mr.  Sherman,  in  January,  1S68, 
being  then  Chairman  of  the  Committee  on  Finance  in  the 
Senate,  introduced  a  bill  to  change  the  gold  coins  of  the 
United  States,  so  as  to  make  them  correspond  with  the 
French  25  franc  piece ;  and  to  make  the  silver  half-dollar 
correspond  in  weight  to  two  and  a  half  silver  francs,  and 
dropping  the  dollar  entirely.  The  bill  as  introduced  in  the 
House,  however,  contained  a  dollar  piece.  This  piece  was 
afterward  dropped,  and  the  trade  dollar  substituted.  The 
words  now  incorporated  in  section  35  n,  making  the  gold 
dollar  the  sole  unit  of  value,  were  embraced  in  the  bill  as 
first  introduced  by  Mr.  Hooper.  Who  suggested  this  provis- 
ion, or  whose  hand  framed  it,  does  not  appear  ;  and  no  one 
has  had  the  courage  to  own  it.  Suffice  it  to  say  that  no 
heavier  hand  was  ever  lifted  against  this  country. 

While  the  bill  was  under  consideration  in  the  House,  ex- 
cept a  mere  allusion  by  Mr.  Hooper  and  Mr.  Potter,  there  is 
not  a  single  word  in  the  discussion  that  took  place,  then  or 
afterward,  in  the  House  or  in  the  Senate,  indicating  that  any- 
body understood  that  a  change  was  to  be  made  in  the  stand- 
ard of  value  in  the  United  States  ;  or  that  this  was  part  of  a 
concerted  movement  to  drop  silver  from  the  money  of  the 
world.  From  the  discussion  that  took  place, — which  per- 
tained altogether  to  other  matters  ;  such  as  minor  coins,  and 
whether  the  eagle  should  be  retained  on  fractional  silver 
pieces  or  not, — it  was  evident  that  nobody  contemplated  any 
such  thing,  or  knew  that  a  provision  was  in  the  bill  making- 
such  a  change  in  our  monetary  standard. 

If  further  evidence  of  these  facts  were  needed,  we  have  it 
in  the  vote  taken  in  this  House  in  April,  1874, — more  than  a 
year  after  the  passage  of  Mr.  Hooper's  bill, — on  a  resolution 
by  a  distinguished  member  from  Massachusetts  (Mr.  Hoar) 
*  *  *  A  distinguished  senator  from  New  York  [Conkling] 
a  few  days  later,  asked,  apparently  in  astonishment,  if  it  was 
true  that  there  was  by  law  no  American  dollar.  Not  an  in- 
timation was  given  to  the  country  by  the  public  press  any- 
II 


1 62  OUR  MONEY  WARS. 

where  that  such  a  change  was  contemplated.  You  will 
search  in  vain  the  journals  of  the  country  to  find  any- 
where a  hint  of  such  a  thing.  Doubtless  there  were  those 
who  understood  it.  The  money-dealers  of  Wall  Street,  of 
Lombard  Street,  of  the  Bourse  of  Paris  and  of  Hamburg 
understood  it.  They  knew  Ricardo  by  heart :  they  knew 
the  history  of  such  changes  in  other  times  ;  and  they  knew 
the  history  of  resumption  in  England  ;  and  they  knew  very 
well  what  would  be  the  effect  of  such  an  alteration  in  the 
standard, — with  national  debts  aggregating  $25,000,000,000. 
The  cunning  knavery  concealed  under  the  impenetrable  dis- 
guise thrown  around  the  bill,  at  the  time  of  its  passage,  has 
come  finally  to  be  the  most  marked  feature  of  the  whole 
measure.  I  repeat  that  the  bill  passed  through  the  Senate, 
without  even  being  read  through,  and  without  one  single 
word  in  the  debate  upon  it  there  to  indicate  any  change  in 
the  metallic  standard.  But  we  have  evidence  from  another 
source  that  no  such  thing  was  in  the  minds  of  the  chief 
officers  of  the  Government.  The  President,  who  signed  the 
bill,  evidently  was  not  aware  of  the  covert  provisions  it 
contained. 

Nobody  need  believe  that  John  Sherman  did  not  know  all 
those  years  what  he  was  doing :  though  he  pretends  that 
he  did  not.  It  is  evident  that  he  got  into  the  conspiracy 
soon  after  Germany  demonetized  silver. 

More  candid  was  Dr.  Linderman,  director  of  the  mint, 
who,  in  his  testimony  before  the  United  States  monetary 
commission  of  1876,  said  :  "  Within  thirty  days  after  the 
policy  of  Germany  had  been  determined  upon,  of  course 
everybody  saw  and  everybody  knew,  that  to  carry  out  that 
policy,  Germany  must  get  rid  of  two-thirds  of  her  silver  and 
put  an  equal  amount  of  gold  in  stock.  That  would  make  an 
immediate  draft  on  gold  stocks  in  the  market,  and  brokers 
commenced  to  charge  a  difference  and  the  decline  of  silver 
commenced  immediately." 

Warwick  Martin  said  in  1880:  "That  Mr.  Richardson, 
Secretary  of  the  Treasury,  in  the  fall  of  1873,  did  not  know 
of  or  understand  the  law,  is  evident  from  the  fact  that, 
months  after  its  passage,  he  recommended  immediate  re- 
sumption of  specie  payments  in  silver,  and  made  a  vain  at- 
tempt to  carry  out  his  recommendation.  That  the  President, 
though  he  had  signed  the  bill,  did  not  understand  its  effect, 


OUR  MONEY  WARS.  163 

is  evident  from  the  fact  that  he  afterward  wrote  a  letter  ad- 
vocating the  payment  of  silver;  and  stating  that  we  ought  to 
have  $300,000,000  of  silver  coin  in  circulation."' 

The  allegation  that  the  Mint  of  the  United  States  in  1873 
had  ceased  to  coin  silver  dollars,  has  no  foundation  in  truth  ; 
for  in  1S70,  1S71,  1872  and  three  months  in  1S73,  there 
were  coined  a  larger  amount  of  silver  dollars  than  ever  be- 
fore in  the  same  period,  as  follows:  In  1870,  $588,308  ;  in 
1871,  $659,929  ;  in  1872,  $1,112,961  ;  in  1S73  (three  months), 
$977,150.  These  seem  small,  unimportant  figures,  but 
an  immense  fact  is  deducible  from  them.  The  long  heads 
saw  that  since  silver  had  got  as  cheap  as  gold,  and  was  likely 
to  be  cheaper,  a  vast  amount  of  it  would  be  coined,  and  this 
7C0it hi  destroy  their  scheme  for  a  universal  gold  basis,  unless 
silver  should  he  demonetized.  This  idea  I  have  not  seen  else- 
where stated. 

Senator  Teller  said  in  1890  : — Mr.  President,  the  Act  of 
1873  was  equivalent,  as  I  have  said  before,  to  adding  to  every 
debt  in  the  land,  private  and  public,  if  to  be  paid  to-day, 
from  30  to  ^  per  cent,  more  than  the  party  contracted  to 
pay.  Suppose  the  attempt  had  been  made  by  the  creditor 
class  by  law  to  add  to  their  holdings  30  per  cent.,  to  compel 
the  debtor  to  give  them  30  per  cent,  more  of  money  or  pro- 
ducts, the  whole  country  would  have  been  in  arms  ;  there 
would  have  been  revolution  and  war,  and  rightfully,  too. 


Warwick  Martin  says  : — Under  the  law  of  1873,  the  trade 
dollar  was  created.  It  contained  420  grains  standard  silver, 
and  was  made  legal  tender  for  $5  only.  In  1876  this  dollar 
was  declared  legal  tender  for  nothing.  In  1878  the  dollar  of 
412^  grains  was  again  monetized.  The  trade  dollar,  for  want 
of  legal  value,  was  worth  only  90  cents.  The  dollar  of  412;} 
grains  was  and  is  100  cents;  because  legal  tender  to  any 
amount.  The  commercial  value  of  the  metal  in  the  trade 
dollar  is  7-3-  grains  greater  than  in  the  other  dollar.  But  the 
one  has  legal  value  and  the  other  has  none.  This  makes  the 
difference.  The  only  good  that  was  ever  derived  from  this 
dollar  is  the  complete  p;oof  of  our  proposition.  The  law 
makes  and  unmakes  the  money. 

Here  is  the  wording  of  the  bill  after  Mr.  Hooper's  tinker- 
ing: (<  That  the  silver  coins  of  the  United  States  shall  be  a 
dollar,  a  half  dollar,  or  50-cent  piece ;  a  quarter  dollar,  or  25- 


^4  OUR  MONEY  WARS. 

cent  piece;  a  dime,  or  io-cent  piece.  The  weight  of  the 
dollar  shall  be  384  ;  the  half  dollar,  the  quarter  dollar  and 
dime  shall  be,  respectively,  one-half,  one-quarter  and  one- 
tenth  of  the  weight  of  said  dollar.  Which  coins  shall  be  a  legal 
tender,  at  their  nominal  value,  for  any  amount  not  exceeding 
five  dollars  in  one  payment." 

This  section  was  stricken  out  by  the  Senate  Committee, 
and  the  following  inserted:  "That  the  silver  coins  of  the 
United  States  shall  be  a  trade  dollar  ;  a  half  dollar,  or  50-cent 
piece;  a  quarter  dollar,  or  25-cent  piece  ;  a  dime,  or  io-cent 
piece.  The  weight  of  the  trade  dollar  shall  be  420  grains 
troy,  the  weight  of  the  half  dollar  shall  be  12^  grammes,  the 
quarter  dollar  and  the  dime  shall  be,  respectively,  one- 
half  and  one-fifth  of  the  weight  of  the  said  half  dollar. 
Said  coins  shall  be  a  legal  tender  at  their  nominal  value  in 
any  sum  not  exceeding  five  dollars  in  any  one  payment." 

Observe  the  cunning  trick  of  leaving  off  "grains  troy" 
after  the  "384  "  and  the  use  of  "grammes  "  instead  of  the 
usual  number  of  "rains -in  the  second  version. 


To  substantiate  the  greatness  of  the  great  fraud  of  1873, 
the  following  points  are  added  from  the  records  : — 

John  Sherman  seeks  to  create  the  impression  that  the  de- 
monetization of  silver  was  well  understood  by  the  senators 
and  representatives  at  the  time  they  voted  for  it.  He  justi- 
fies his  vote  for  it,  and  yet  at  the  same  time  seems  quite 
anxious  to  divide  the  responsibility  with  others. 

Hon.  W.  D.  Kelley,  Chairman  of  the  Coinage  Committee 
of  the  House,  did  not  know  that  the  bill  demonetized  silver, 
though  he  reported  the  bill.  Garfield  did  not  know  it; 
Blaine  did  not  know  it.  They  were  both  then  members  of 
the  House.  Conkling  did  not  know  it.  So  these  gentlemen 
asserted,  and  they  were  certainly  as  truthful  as  Old  Sherman. 

Sherman,  in  his  opening  speech  of  the  late  campaign, 
delivered  at  Paulding,  Ohio,  August  27,  1S91,  in  regard  to 
the  bill  of  1873  demonetizing  silver,  said:  "The  Act  of  1873 
was  not  an  act  of  the  party  then  in  power,  but  it  was  an  act 
of  all  parties.  It  was  voted  for  by  Democrats  and  Repub- 
licans alike,  after  full  consideration  for  three  years  in  Con- 
gress. It  was  voted  for  by  every  representative  from  the 
silver  States." 

Now,  we  want  to  prove  Sherman  a  prevaricator.     From 


OUR  MONEY  WARS.  165 

the  history  of  the  Act  of  1S73  and  the  Act  of  1878,  we  copy 
the  following  : — Judge  Kelley,  of  Pennsylvania,  was  Chairman 
of  the  Committee  on  Coinage,  Weights  and  Measures  in 
1872,  when  the  bill  originally  passed  the  House.  This  is 
what  he  said  en  the  floor  of  the  House  March  9,  1878  : — 
In  connection  with  the  charge  that  I  advocated  the  bill 
which  demonetized  the  standard  silver  dollar,  I  say  that, 
though  the  Chairman  of  the  Committee  on  Coinage,  I  was  as 
ignorant  of  the  fact  that  it  would  demonetize  the  silver  dol- 
lar, or  of  its  dropping  the  silver  dollar  from  our  system  of 
coins,  as  were  those  distinguished  senators,  Messrs.  Blaine 
and  Voorhees,  who  were  then  members  of  the  House,  and 
each  of  whom,  a  few  clays  since,  interrogated  the  other  : 
"  Did  you  know  it  was  dropped  when  the  bill  was  passed  ? " 
"  No,"  said  Mr.  Blaine ;  "  did  you  ?  "  "  No,"  said  Mr.  Voor- 
hees. I  do  not  think  that  there  were  three  members  in  the 
House  that  knew  it.  I  doubt  whether  Mr.  Hooper,  who,  in 
my  absence  from  the  Committee  on  Coinage  and  attendance 
on  the  Committee  of  Ways  and  Means,  managed  the  bill, 
knew  it.  I  say  this  in  justice  to  him. — (Congressional 
Record,  volume  7,  part  2,  Forty-fifth  Congress,  second  ses- 
sion, page  1605.) 

Mr.  Holman,  in  a  speech  delivered  in  the  House  of  Rep- 
resentatives July  13,  1876,  said  : — I  have  before  me  the 
record  of  the  proceedings  of  this  House  on  the  passage  of 
that  measure,  a  record  which  no  man  can  read  without  being 
convinced  that  the  measure  and  the  method  of  its  passage 
through  this  House  was  a  "  colossal  swindle."  I  assert  that 
the  measure  never  had  the  sanction  of  this  House,  and  it 
did  not  possess  the  moral  force  of  law. — (Congressional 
Record,  volume  4,  part  6,  Forty-fourth  Congress,  first  ses- 
sion, appendix,  page  193.) 

Again,  on  August  5,  1876,  he  said  : — The  original  bill  was 
simply  a  bill  to  organize  a  bureau  of  mines  and  coinage. 
The  bill  which  finally  passed  the  House  and  ultimately  be- 
came a  law,  was  certainly  not  read  in  this  House.  *  *  *  * 
It  was  never  considered  before  the  House  as  it  was  passed. 
Up  to  the  time  the  bill  came  before  this  House  for  final  pas- 
sage, the  measure  had  simply  been  one  to  establish  a  bureau 
of  mines  ;  I  believe  I  use  the  term  correctly  now.  It  came 
from  the  Committee  on  Coinage,  Weights  and  Measures. 
The  substitute  which  finally  became  a  law,  was  never  read. 


1 66  OUR  MONEY  WARS. 

and  is  subject  to  the  charge  made  against  it  by  the  gentle- 
man from  Missouri  (Mr.  Bland),  that  it  was  passed  by  the 
House  without  a  knowledge  of  its  provisions,  especially  upon 
that  of  coinage. 

I,  myself,  asked  the  question  of  Mr.  Hooper,  who  stood 
near  where  I  am  now  standing,  whether  it  changed  the  law 
in  regard  to  coinage.  And  the  answer  of  Mr.  Hooper  cer- 
tainly left  the  impression  upon  the  whole  House  that  the  sub- 
ject of  the  coinage  was  not  affected  by  that  bill. — (Congres- 
sional Record,  vol.  4,  part  6,  Forty-fourth  Congress,  first  ses- 
sion, page  5237). 

Mr.  Cannon,  of  Illinois,  in  a  speech  made  in  the  House  on 
July  13,  1876,  said  : — This  legislation  was  had  in  the  Forty- 
second  Congress,  February  12,  1873,  by  a  bill  to  regulate  the 
mints  of  the  United  States,  and  practically  abolished  silver 
as  money,  by  failing  to  provide  for  the  coinage  of  the  silver 
dollar.  It  was  not  discussed,  as  shown  by  the  Record,  and 
neither  members  of  Congress  nor  the  people  understood  the 
scope  of  the  legislation. — (Ibid.,  appendix,  page  197). 

Senator  Conkling,  in  the  Senate,  March  30,  1876,  during 
the  remarks  of  Senator  Bogy  on  the  bill  (S.  264)  to  amend 
the  laws  relating  to  the  legal  tender  of  silver  coin,  in  surprise, 
inquired  : — Will  the  Senator  allow  me  to  ask  him  or  some 
other  senator  a  question  ?  Is  it  true  that  there  is  now  bylaw 
no  American  dollar  ?  And,  if  so,  is  it  true  that  the  effect  of 
this  bill  is  to  be  to  make  half  dollars  and  quarter  dollars  the 
only  silver  coin  which  can  be  used  as  a  legal  tender  ? 

Mr.  Bright,  of  Tennessee,  said  of  the  law  : — It  passed  by 
fraud  in  the  House,  never  having  been  printed  in  advance, 
bi:ing  a  substitute  fur  the  printed  bill ;  never  having  been 
read  at  the  clerk's  desk,  the  reading  having  been  dispensed 
with  by  an  impression  that  the  bill  made*  no  material  altera- 
tion in  the  coinage  laws  ;  it  was  passed  without  discussion, 
debate  being  cut  off  by  operation  of  the  previous  question. 
It  was  passed,  to  my  certain  information,  under  such  circum- 
stances that  the  fraud  escaped  the  attention  of  some  of  the  most 
watchful  as  well  as  the  ablest  statesmen  in  Congress  at  the 
time.*  *  *  Ay,  sir,  it  was  a  fraud  that  smells  to  heaven.  It 
was  a  fraud  that  will  stink  in  the  nose  of  posterity,  and  for 
which  some  person  must  give  account  in  the  day  of  retribu- 
tion.— (Record,  vol.  7,  part  1,  second  session,  Forty-fifth 
Congress,  page  584.) 


OUR  MONEY  WARS.  167 

General  Garfield,  in  a  speech  made  at  Springfield,  Ohio, 
during  the  fall  of  1877,  said  : — Perhaps  I  ought  to  be 
ashamed  to  say  so,  but  it  is  the  truth  to  say  that,  at  that 
time  being  chairman  of  the  Committee  on  Appropriations, 
and  having  my  hands  overfull  during  all  that  time  with  work, 
I  never  read  the  bill.  I  took  it  upon  the  faith  of  a  prominent 
Democrat  and  a  prominent  Republican,  and  I  do  not  know 
that  I  voted  at  all.  There  was  no  call  for  the  yeas  and  nays, 
and  nobody  opposed  that  bill  that  I  know  of.  It  was  put 
through  as  dozens  of  bills  are,  as  my  friend  and  I  know,  in 
Congress,  on  the  faith  of  the  report  of  the  chairman  of  the 
committee;  therefore  I  tell  you,  because  it  is  the  truth,  that 
I  have  no  knowledge  about  it. 

Senator  Allison,  on  February  15,  187S,  when  the  bill 
(H.  R.  1093)  to  authorize  the  free  coinage  of  the  silver 
dollar  was  under  consideration  said  :  "  But  when  the  secret 
history  of  this  bill  of  1873  comes  to  be  told,  it  will  disclose 
the  fact  that  the  House  of  Representatives  intended  to  coin 
both  gold  and  silver,  and  intended  to  place  both  metals  upon 
the  French  relation  instead  of  on  our  own,  which  was  the 
true  scientific  position  with  reference  to  this  subject  in  1873, 
but  that  the  bill  afterward  was  doctored,  if  I  must  use  the 
term,  and  I  use  it  in  no  offensive  sense,  of  course " 

Mr.  Sargent  interrupted  him  and  asked  him  what  he 
meant  by  the  word  "  doctored." 

Mr.  Allison  said  :  "  I  said  I  used  the  word  in  no  offensive 
sense.  It  was  changed  after  discussion,  and  the  dollar  of 
420  grains  was  substituted  for  it." — (Congressional  Record, 
volume  7,  part  2,  Forty-fifth  Congress,  second  session,  page 
1058.) 

On  February  15,  1878,  during  the  consideration  of  the 
bill  above  referred  to,  the  following  colloquy  between  Sen- 
ator Blaine  and  Senator  Voorhees  took  place  : 

Mr.  Voorhees. — I  want  to  ask  my  friend  from  Maine, 
whom  I  am  glad  to  designate  in  that  way,  whether  I  may  call 
him  as  one  more  witness  to  the  fact  that  it  was  not  generally 
known  whether  silver  was  demonetized.  Did  he  know,  as 
Speaker  of  the  House,  presiding  at  that  time,  that  the  silver 
dollar  was  demonetized  in  the  bill  to  which  he  alludes? 

Mr.  Blaine. — I  did  not  know  anything  that  was  in  the 
bill  at  all.  As  I  have  before  said,  little  was  known  or  cared 
on  the  subject.     [Laughter.]     And  now  1  should  like  to  ex- 


1 68  OUR  MONEY  WARS. 

change  questions  with  the  Senator  from  Indiana,  who  was 
then  on  the  floor,  and  whose  business  it  was,  far  more  than 
mine,  to  know,  because  by  the  designation  of  the  House  I 
was  to  put  questions;  the  Senator  from  Indiana,  then  on  the 
floor  of  the  House,  with  his  power  as  a  debater,  was  to  un- 
fold them  to  the  House.     Did  he  know  ? 

Mr.  Voorhees. — I  very  frankly  say  that  I  did  not. — 
(Ibid.,  page   1063.) 

Senator  Leek,  in  a  speech  made  in  the  Senate,  January  10, 
187S,  said: — It  [the  bill  demonetizing  silver]  never  was 
understood  by  either  House  of  Congress.  I  say  that  with 
full  knowledge  of  the  facts.  No  newspaper  reporter — and 
they  are  the  most  vigilant  men  I  ever  saw  in  obtaining  infor- 
mation— discovered  that  it  had  been  done. — (Congressional 
Record,  volume  7,  part  1,  Forty-fifth  Congress,  second 
session,  page  260.) 

Mr.  Thurman  said  : — "  I  cannot  say  what  took  place  in 
the  House,  but  I  know,  when  the  bill  was  pending  in  the 
Senate,  we  thought  it  was  simply  a  bill  to  reform  the  mint, 
regulate  coinage,  and  fix  up  one  thing  and  another  ,  and  there 
is  not  a  single  man  in  the  Senate,  I  think,  unless  a  member 
of  the  committee  from  which  the  bill  came,  who  had  the 
slightest  idea  that  it  was  even  a  squint  toward  demonetiza- 
tion." 

On  January  14,  1875,  the  same  date  that  he  signed  the 
Resumption  Act,  President  Grant  sent  a  special  message  to 
Congress,  advising  the  establishment  of  two  or  more  mints 
at  Chicago,  St.  Louis  and  Omaha  to  coin  silver  dollars  to 
provide  for  resumption. 

In  this  message  General  Grant  said  :  "  With  the  present 
facilities  for  coinage  it  would  take  a  period  probably  beyond 
that  fixed  by  law  for  final  specie  resumption  to  coin  the 
silver  necessary  to  transact  the  business  of  the  country." 
[My  understanding  has  been  that  Sherman  in  the  Senate 
and  Hooper  in  the  House  understood  and  passed  the  bill. 
— S.  L.] 

The  Secretary  of  N.  Y.  Chamber  of  Commerce. — This 
man,  John  Austin  Stevens  Jr.,  who,  30  years  before,  was  a 
neighbor  and  boy  companion  of  the  writer,  put  a  piece  in  the 
N.  Y.  Times  in  1873  that  was  much  used  at  the  time  by  J.  G. 
Drew  and  other  writers.  He  said  : — The  country  at  large 
has  felt  the  pressure  of  the   screw,  but  they  have  not  been 


OUR  MONEY  WARS.  169 

able  to  discover  precisely  from  what  quarter  the  pinch  comes, 
because  the  currency  contraction  was  mostly  confined  to 
those  Treasury  notes  which,  though  not  currency  in  the  strict 
sense  of  the  term,  were  used  as  such  in  the  larger  transactions 
of  trade  and  financial  exchange. 

The  Great  Panic  of  1873. — Judge  Kelley  gives  this  valu- 
ablesketch  of  the  wayin  which  the  thunderbolt  fell  in  1873  : — 
In  1865-6,  as  I  have  shown,  business  was  on  a  cash  basis. 
Few  business  men  were  borrowing  money  for  any  purpose  ; 
the  rate  of  interest  was  low  ;  and  there  was  employment,  at 
liberal  wages,  for  everybody  who  could  and  would  work. 
My  venerable  friend,  Henry  C.  Carey,  and  I,  during  the 
month  of  August,  1873,  visited  the  Northwest.  In  the  course 
of  our  travels,  we  noticed  the  fact  that  savings-banks  in 
Pittsburg  were  publicly  offering  seven  per  cent,  for  deposits, 
and  we  were  assured,  by  reputable  business  men  connected 
with  some  of  these  institutions,  that  they  were  privately  pay- 
ing higher  rates.  We  had  already  learned  that  eight  per 
cent,  was  being  offered  by  such  institutions  in  Chicago,  and 
had  heard  that  higher  rates  were  paid.  We  did  not  hesitate 
to  predict  a  speedily  coming  financial  crisis  ;  and  a  promi- 
nent banker  of  Chicago,  in  response  to  our  predictions, 
asked  why  we  had  come  among  them  as  prophets  of  evil,  in 
the  midst  of  such  abounding  evidences  of  present  and  pros- 
pective prosperity.  To  which,  Mr.  Carey  replied  by  asking, 
"  At  what  rates  of  interest  savings-banks  must  be  lending 
money,  when  they  could  undertake  to  pay  eight  or  ten  per 
cent,  for  deposits  ?  "  That  conversation  occurred  on  August 
18,  in  one  of  the  parlors  of  the  Grand  Hotel.  When  we  re- 
turned to  Philadelphia,  we  found  that  the  acceptances  of 
merchants  of  excellent  standing,  and  of  the  leading  transpor- 
tation companies  whose  offices  were  in  the  city,  were  being 
hawked  upon  the  market  at  the  rate  of  12,  15  and  18  per 
cent,  per  annum  ;  and  that  much  paper  was  paying  at  the 
rate  of  24  per  cent.  As  the  money  of  the  country  had  been 
withdrawn,  men  who  were  engaged  in  enterprises  must  bor- 
row credit,  and  in  desperate  efforts  to  struggle  against  fate, 
— after  our  contraction  policy  had  decreed  their  ruin, — 
were,  in  the  hope  of  making  a  fortunate  turn  ;  and  seeing 
bankruptcy  before  them  if  they  could  not  make  such  a  turn, 
borrowed  at  any  rate. 

Precisely  one  month  from  the  interview  referred  to,  on 


170  OUR  MONEY  WARS. 

September  iS,  the  great  house  of  Jay  Cooke  &  Co.  sus- 
pended ;  and  in  a  few  days  thereafter  the  National  banks  of 
New  York  city  also  closed  their  doors  against  their  deposi- 
tors, whose  checks  they  were  unable  to  pay,  either  in  Green- 
backs or  their  own  notes  ;  instead  of  which  they  issued 
certificates  of  deposit,  which  rapidly  depreciated  to  94  or  95 
per  cent,  in  Greenbacks. 


John  E.  Williams,  President  of  New  York  Metropolitan 
Bank,  and  a  famous  Greenbacker,  said  in  1875  : — In  my 
letter  to  Senator  Sherman,  guilder  head  5),  I  discussed  this 
point  at  some  length.  A  close  examination  of  the  panic  of 
1873  sheds  additional  light,  however,  on  the  question. 
Then  the  aggregate  quantity  of  circulation  was  set  down  at 
800  millions — about  equally  divided  between  legal-tender 
and  National  bank  notes.  It  is  now  quite  evident,  from  the 
record  of  the  operations  of  September  and  October,  1873,  tna^ 
800  millions  were  not  only  not  too  much,  but  certainly  too 
little  for  the  emergency.  As  proof  of  this,  early  in  Septem- 
ber, gold  was  at  a  premium  of  16  per  cent.;  between  that 
time  and  October  11,  it  fell  to  8^  per  cent,  about  one-half  ! 
While  currency, — the  well-abused,  scandalous  currency 
[Greenbacks], — during  that  six  weeks,  rose  in  the  market, 
and  sold  at  from  103^  to  104 — four  per  cent,  above  nominal 
par !  If  this  does  not  show  that  more  paper  rather  than 
more  gold  was  wanted  to  relieve  the  extraordinary  pressure, 
then  figures  go  for  nothing  !  Mills  stopped  for  want  of  cur- 
rency, in  cases  where  owners  were  worth  millions  ;  railroads, 
coal-mines,  and  all  sorts  of  manufactories  found  it  difficult 
to  get  currency  to  pay  their  hands.  Later,  it  is  true,  the 
scarcity  alarmed  persons  who  had  notes  to  pay,  and  they 
locked  up  in  their  safes  currency  to  meet  their  indebtedness. 
But  the  overwhelming  demand  was  from  the  West.  Sight 
drafts  on  this  city  against  grain  shipped,  amounted,  at  one 
time,  to  a  million  dollars  a  day.  The  crop  was  large,  foreign 
demand  good,  farmers  anxious  to  realize,  Europe  ready  to 
buy,  at  full  prices  ;  and  hence  the  heavy  shipments,  with  un- 
precedented drafts.  At  the  rate  of  a  million  a  day,  a  single 
month  would  take  out  of  the  city  25  millions. 

True,  the  cheap  money  of  the  preceding  summer,  to  this 
amount,  or  more,  had  been  loaned  to  brokers  and  others,  on 
call ;  but   when  the  call   came,  the  currency   had  been  sent 


OUR  MONEY  WARS. 


171 


away,  the   debtors    could   not    pay, — the   bank   vaults   were 
emptied  of  the  currency  they  relied  upon. 

The  panic  of  1873  occurred  under  somewhat  remarkable 
circumstances.  Our  foreign  trade  was  thought  to  be  in  our 
favor.  We  were  importing  specie  at  that  time;  but  that 
afforded  no  relief;  in  fact,  was  regarded,  even  by  bullion- 
ists,  with  disfavor.  What  the  public  hungered  and  thirsted 
for  was  Greenbacks, — or  even  bank  bills.  But  no  more  of 
these  could  be  had  ; — thev  had  emigrated — gone  West ! 


Judge  Martin  says  : — The  running  up  of  gold  from  25 
premium  to  60,  terminating  in  "  Black  Friday  "  in  1869, and  the 
terrible  crisis  of  September,  1S73,  were  caused  [immediately. 
— S.L.]  by  the  provision  of  the  banking  law,  which  allows 
banks  in  money  centers  to  pay  interest  on  the  deposits  of  coun- 
-try  banks.  To  make  the  interest  they  are  compelled  to  use 
the  money  in  some  way.  They  cannot  discount  paper  upon 
these  deposits,  as  they  are  liable  to  be  drawn  for  at  any  mo- 
ment. They  dare  not  loan  this  money  to  merchants  or 
manufacturers,  or  for  business  of  any  kind.  They,  therefore, 
loan  it  on  call  to  stock  gamblers.  This  was  extensively  done 
in  the  fall  of  1873.  The  Western  and  Southern  banks  and 
bankers  needed  their  money  thus  deposited  in  New  York, 
and  drew  for  it.  It  could  not  be  paid  by  the  New  York 
banks.  The  banks  called  on  the  stock  gamblers  for  pay- 
ment. They  could  not  respond.  There  was  no  sale  for 
stocks.  The  stock  board  was  closed  for  two  weeks.  Several 
large  banking-houses  and  two  or  three  banks  failed.  All 
the  National  banks  in  the  city  suspended  currency  payments, 
and  issued  $30,000,000  Clearing-house  certificates,  which 
passed  as  money  between  the  banks.  These  banks  would 
have  failed,  and  been  put  into  the  hands  of  receivers,  but 
for  the  fact  that  the  Secretary  of  the  Treasury  advanced 
these  National  banks  $26,000,000  legal-tender  notes.  These 
banks  received  on  deposit  all  the  money  they  could  get ;  but 
they  marked  checks  "  good,"  and  did  not  pay  them  at  that 
time.  *  *  *  The  President  of  the  Gallatin  National  Bank, 
and  other  bank  officers,  attributed  this  crisis  to  this  one 
cause,  and  labored  to  break  up  the  practice;  but  they  were 
unsuccessful.  Mr.  Richardson,  Secretary  of  the  Treasury, 
laid  the  matter  before  Congress,  and  insisted  upon  the  pas- 
sage of  a  law  prohibiting  National  banks  from  paying  inter- 


1 72  OUR  MONEY  WARS. 

est  on  deposits.  But  Wall  Street,  as  usual,  was  too  strong 
for  Congress. 

The  Bank  Inflation — Is  well  illustrated  in  the  follow- 
ing extract  from  the  report  of  the  nine  presidents  of 
Associated  Banks  of  New  York,  who  had  been  appointed  to 
report  a  revision  of  the  Clearing-house  system  after  the  panic 
of  1873  : — Deposits  which  are  derived  from  strictly  commer- 
cial operations  cannot  fluctuate  so  widely,  from  time  to  time, 
as  to  produce  disturbance  in  the  community  :  and  banks 
which  confine  their  business  to  them,  as  they  naturally 
arise,  are  always  reliable  and  regular  in  the  treatment  of  their 
dealers ;  and  can  be  conducted  with  ease  and  comfort  to 
their  managers,  and  safety  to  the  public.  On  the  contrary, 
deposits  which  are  purchased  by  payment  of  interest,  or 
otherwise  ;  and  which  must,  therefore,  of  necessity,  be 
largely  loaned  "on  demand",  are  the  cause  of  continual 
agitation  and  solicitude,  to  those  who  hold  them  in  charge. 
They  are  certain  to  be  withdrawn  at  the  season  of  the  year 
and  at  the  moment  most  inconvenient  to  the  banks,  and  to 
their  dealers.  This  fact  is  best  illustrated  by  the  following 
figures  : 
The  average  deposits  of  the  60  Clearing-house 

banks    for  10    weeks,  from  July  5  to  Sept.  6, 

were. $232,228,000 

The  lowest  amount   reached  since  the   panic 

was 143,170,000 

Showing  a  total  reduction    of $89,058,000 

Of  the  above  amount  during  the 
10  weeks,  12  interest-paying 
banks   held $111,585,000 

The  lowest  total  reached  by  them 

since  the  panic $52,609,000 

Showing  a  loss  in  12  banks  of $58,916,000 

And  in  the  other  48  banks   of $30,142,000 

And  were  it  not  for  the  fact  that  several  of  the  48  banks  are 
more  or  less  involved  in  the  same  practice,  this  disparity 
would  be  still  more  apparent. 

On  the    other    hand,  see  The    Legal-tender  Contrac- 
tion : — The  following  statement  was  taken    from  the  books 


i  >l  R  MONEY  WARS.  173 

of  the  Treasury  I  >epartment  by  Moses  W.  Field.  It  ex- 
hibits the  contraction  of  the  circulating  medium,  from  Sep- 
tember 1,  1S65,  to  December  1,  1873,  exclusive  of  coin  : 

Currency,  September  i,  1865. 

U.  S.  Notes $433,160,569 

Fractional     Currency 26,344,742 

National    bank-notes 185,000,000 

Compound  Interest  Legal-tender  Notes....  217,024,160 

Treasury  5  per  cent  Legal-tender 32,536,991 

Temporary  Loan    Certificates   10 — d — d.  .  .  .  107,148,713 

Certificates  of  Indebtedness 85,093,000 

Treasury  Notes  past  due  Legal- ) 

tender  and  not  presented       j  o  o» 

State  Bank  Notes 78,867,575 

Three-Year  Treasury-notes 830,000.000 

$1,996,678,770 
Circulating  Medium,  Exclusive  of  Coin,  Dec.  i,  1873  : 

U.   S.   Notes $367,001,685 

Fractional  Currency 48,000,000 

Certificates  of  Indebtedness  bearing  interest. .  678,000 

National  Bank  Currency 350,000,000 

Total  Dec.  1,  1873 $765,679,685 

$1,996,678,770 
765,679,685 

Contraction     $1,230,999,085. 

That  deep-thinking  merchant  W.  H.  Winder,  in  explaining 
the  panic  of  1873 — before  a  Congress  committee  in  1878 — 
made  excess  of  imports  (one  of  the  results  of  contraction)  a 
prominent  cause.  He  said  :  "  Imports  in  panicky  '73,  were 
642  millions,  or  300  millions  more  than  in  1868,  or  six  times 
those  of  1833  (101  millions).  For  five  years  prior  to  1873, 
the  imports  were  579  millions  more  than  the  exports;  and 
for  ten  years  they  were  1,127  millions — facts  not  before 
noted."' 

Now  hear  a  pompous  "  conservative,"  David  A.  Wells, 
talk  about,  without  even  attempting  to  explain,  our  panic. 
He    sagely   enumerates    "  phenomena    antecedent."     This 


174  OUR  MONEY  WARS. 

poor  creature,  who  was  one  of  a  half  a  dozen  men  most  re- 
sponsible for  the  "  Hard  Times,"  sneaks  away  from  the  facts 
as  follows,  in  1887  : — David  A.  Wells  in  Popular  Science 
Monthly  for  July  :  The  period  of  economic  disturbance, 
which  commenced  in  1873,  appears  to  have  first  manifested 
itself,  almost  simultaneously,  in  Germany  and  the  United 
States,  in  the  latter  half  of  that  year.  [?]  In  the  former  country, 
the  great  and  successful  results  of  the  war  with  France  had 
stimulated  every  department  of  thought  and  action  among  its 
people  into  intense  activity.  The  war  indemnity,  which  had 
been  exacted  of  France,  had  been  used  in  part,  to  pay  off 
the  debt  obligations  of  the  Government ;  and  ready  capital 
became  so  abundant  that  banking  institutions  of  note  almost 
begged  for  opportunity  to  place  loans  at  rates  as  low  as  one 
per  cent.,  with  manufacturers,  for  the  purpose  of  enlarging 
their  establishments.  As  a  legitimate  result,  the  whole 
country  projected  and  engaged  in  all  manner  of  new  industrial 
and  financial  undertakings.  In  Prussia  alone,  687  new  joint- 
stock  companies  were  founded  during  the  year  1872,  and 
the  first  six  months  of  1873  ;  with  an  aggregate  capital  of 
$481,045,000.  Such  a  state  of  things,  as  is  now  obvious, 
was  most  unnatural  [?],  and  could  not  continue;  and 
the  reaction  and  disaster  came  with  great  suddenness,  as  has 
been  already  stated,  in  the  fall  of  1873  ;  but  without  antici- 
pation on  the  part  of  the  multitude.  Great  fortunes  melted 
rapidly  away  ;  industry  became  paralyzed  ;  and  the  whole  of 
Germany  passed,  at  once,  from  a  condition  of  apparently 
great  prosperity  to  a  great  depth  of  financial,  industrial  and 
commercial  depression  that  had  never  been  equaled.  [Mark 
— no  cause  at  all  given  for  this. — S.  L.j 

In  the  United  States,  the  phenomena  antecedent  to  the 
crisis  were  enumerated  at  the  time  to  be — "  a  rise  of  prices, 
great  prosperity,  large  profits,  high  wages  and  strikes  for 
higher,  large  importations,  a  railway  mania,  expanded  credit, 
overtrading,  overbuilding  and  high  living."  [Mostly  bosh, 
as  to   1873]. 

The  crisis  began  on  September  17,  by  the  failure  of  a  com- 
paratively unimportant  railway  company — the  New  York  and 
Oswego  Midland.  On  the  18th  the  banking  house  of  Jay 
Cooke  &  Co.  failed.  On  the  19th,  19  other  banking-houses 
failed.  Then  followed  a  succession  of  bankruptcies,  until,  in 
four  years,  the  mercantile  failures  had  aggregated  $775,865,- 


OUR  MONEY  WARS.  175 

000;  and  on   January  1,  1875,  the   amount  of  American  rail- 
way bonds  in  default  amounted  to  $789,367,655. 


How  luminous  is  Sir  Oracle,  in  the  above  !  All  through  this 
book  the  real  causes  of  the  hard  times  are  found.  He  says 
nothing  of  the  great  fact  that  silver  demonetization  was  a  chief 
cause  in  both  Germany  and  the  United  States.  His  state- 
ment that  Germany  went  heavily  into  manufactures,  and 
failed  at  it,  is  very  interesting  in  view  of  the  fact  that  France, 
the  conquered  country — that  did  not  demonetize  silver,  but 
flooded  itself  with  paper — rushed  its  industries— its  manu- 
factures, with  such  success  that  it  paid  Germany  three- 
quarters  of  the  milliard  indemnity  in  goods  and  German 
securities!  and  killed  all  those  German  factories! 

The  Broken  Banks  and  Trust  Companies. — On  Oc- 
tober 23,  1S73,  a  nine-column  article  by  Samuel  Leavitt  was 
printed  in  the  N.  Y.  World,  which  gave  a  full  review  of  the 
New  York  bank  suspension  since  the  Tweed  epidemic  of 
187 1-2  ;  the  condition  of  the  broken  banks,  and  the  prospects 
of  their  depositors. 

The  State  banks  discussed  were  the  Stuyvesant,  Davis 
Collamore,  Brest.,  which  failed  Oct.  13,  187 1;  the  Bull's 
Head,  Richard  Williamson,  Brest.,  failed  March  20,  1873. 

The  National  banks  were  :  The  ( >cean,  ( 'olumbus  S.  Steven- 
son, Brest.,  failed  Dec.  187 1  ;  The  Union  Square,  Henry 
Beekman,  Brest.,  failed  Dec.  13,  1871  ;  The  Eighth  National, 
Union  Adams,  Brest.,  failed  Dec.  13,  1871  ;  The  Atlantic, 
J.  E.  Southworth,  Brest.,  failed  April  26,  1873  ;  The  Com- 
monwealth, George  Ellis,  Brest.,  failed  Sept.  20,  1873. 

The  savings  banks  that  failed  then  and  afterwards  in- 
cluded all  those  on  Third  Avenue.  Naturally  enough,  their 
bank  buildings  were  all  turned  into  drinking-saloons  ; — dis- 
couraged depositors  concluding  to  spend  their  own  money, 
in  a  way  that  would  give  a  definite  and  immediate  pleasur- 
able result.  Government  was  much  to  blame  in  allowing 
savings  banks  to  fail,  and  thus  rob  the  poor. 

These  banks  were  :  The  Guardian,  Win.  M.  Tweed,  Bres- 
ident,  failed  November  18,  187 1  ;  The  Bowling  Green, 
Bolice'  Commissioner  Henry  Smith,  Bresident,  failed  Novem- 
ber 18,  1S71  ;  The  National,  John  McBride  Davidson,  the 
Tweed  safe-maker,  Bresident,  failed  November  18,  187 1  ; 
The  Market,  Wm.  Van  Name,  Bresident,  failed  January  21, 


176  OUR  MONEY  WARS. 

1872  ;  The  Central,  Charles  Peck,  President,  failed  January 

4,  1S72. 

The  Trust  Companies  were  :  Brooklyn  Trust  Co.,  Ethelbert 

5.  Mills,   President,  failed   January   19,    1873  ;    The  Union 
Trust  Co.,  failed  September  20,  1873. 

The  Stuyvesant  people  blamed  the  Chicago  fire.  The 
Pull's  Head  was  robbed  of  $257,000 — thief  never  known.  It 
recovered.  The  Ocean  was  first  crippled  by  a  big  burglary 
of  $100,000  through  a  tunnel.  The  Union  Square  and  Eighth 
National  were  upset  by  the  Ocean.  The  Atlantic  was  robbed 
of  $400,000  by  F.  L.  Taintor,  cashier.  He  went  to  jail. 
The  Commonwealth  was  broken  by  Edward  Haight  &  Co. 
overdrawing  $225,000  before  their  failure.  The  three  Tweed 
banks  need  no  explanation.  Henry  R.  Conklin,  Secretary 
of  the  Market,  stole  $550,000  and  went  to  Canada ;  the  Pres- 
ident, Van  Name,  went  to  Ludlow  Street  jail.  Was  there  when 
the  article  was  written.  The  Centra]  was  crippled  by  the 
Ocean.  The  Brooklyn  Trust  Co.  was  in  bad  hands  :  the 
President  Mills,  the  Secretary  M.  T.  Rodman,  and  the  Treas- 
urer Sprague,  were  all  apparently  defaulters.  Mills  was 
drowned  (suicide,  I  believe).  Sprague  and  Rodman — who 
were  Treasurer  and  Deputy  Treasurer  of  Brooklyn — were  in 
durance  vile  when  the  article  was  written.  The  Union  Trust 
Co.  was  broken  by  the  theft  of  $400,000  by  C.  T.  Carlton, 
Secretary.  It  has  since  been  set  up  in  great  shape  under 
Edward  King,  of  James  G.  King's  Sons. 

This  picture  is  given  as  a  specimen  of  the  liveliness  of  the 
frisky  days  of  Tweed,  Fisk,  Gould  &  Co. 

A  Wise  English  Opinion. — In  1873,  the  Westminster 
Review,  in  an  article  on  "The  Mint  and  The  Banks"  uttered 
these  wise  and  weighty  words  : — In  breaking  this  monopoly 
of  the  banks,  we  should  be  taking  great  strides  toward  the 
attainment  of  that  ideal  system  of  currency  which  Sir  Robert 
Peel  must  have  had  in  his  heart  [certainly  not  in  his  head ! 
— S.  L.]  when  he  passed  his  currency  laws  ;  a  system  in  which 
the  State  shall  be  the  sole  fountain  of  issue  ;  under  which  no 
money  shall  circulate  on  credit  ;  or,  if  it  does,  shall  circulate 
on  the  credit  of  the  State  ;  all  bank  notes  as  well  as  coins, 
bearing  the  image  and  superscription  of  the  head  of  the 
State  ;  and  under  which  all  profits  upon  the  issue  of  money 
shall  form  a  part  of  the  imperial  revenue,  *  *  *  The  power 
of  issue  now  exercised  by  the  Bank  of  England,  and  by  the 


OUR  MONEY  WARS.  177 

English,  Irish  and  Scotch  banks  [all  private  corporations]  is 
a  relic  of  feudalism.  *  *  *  The  private  manufacture  of  coin 
has  been  suppressed  long  ago  ;  but  the  manufacture  of  paper 
money  still  remains.  And  the  profits  of  this  manufacture  are 
allowed  to  remain  in  private  hands :  the  State  taking  upon 
itself  the  manufacture  of  the  only  part  of  the  currency  upon 
which  there  is,  arid  can  be,  a  loss.  It  is  high  time  this  state  of 
things  ceased  ;  that  all  right  of  issue  were  gathered  into  the 
hands  of  the  State  ;  that  the  debt  of  the  Bank  of  England 
were  paid  off ;  that  all  notes  but  those  of  the  State  were 
suppressed  ;  that  the  power  of  issue,  now  exercised  by  the 
banks,  were  vested  in  the  royal  mint,  #  *  and  that  the  profits 
upon  paper  currency  were  claimed  by  the  State  and  appro- 
priated, *  *  to  the  reduction  of  taxation. 

1874. 
Little  Chit  on  Banks. — A  rich  Brooklyn  conservative — 
Congressman  Chittenden,  said  before  the  Committee  of 
Banking  and  Currency  of  the  House,  January  16,  1874  : — I 
believe  that  of  those  1900  National  banks  there  are  not  two- 
thirds  of  them  sound  to-day.  I  mean  not  two-thirds  in  num- 
ber. In  the  vast  proportion  of  them,  the  capital  is  very 
small.  I  know,  for  instance,  how  one  National  bank  was 
established,  and  I  presume  there  were  hundreds  established 
in  the  same  way.  I  say  I  know  a  National  bank  of  $100,000 
capital,  whose  broker  in  New  York  purchased  $100,000  of 
Government  bonds,  and  paid  for  them.  The  owners  of  the 
bank  furnished  the  margin  between  the  90  per  cent,  in  cur- 
rency, which  they  were  allowed  on  the  deposit  of  the  bonds 
and  the  cost  of  the  bonds  ;  and  that  margin  was  all  the 
capital  that  was  ever  put  into  the  bank.  The  broker  sent 
the  bonds  to  Washington,  got  his  90  per  cent,  on  the  dollar 
in  currency,  and  got  the  margin  from  the  gentlemen  who 
established  the  bank.  That  bank,  in  the  late  crisis,  was  one 
of  the  first  to  suspend  ;  but  resumed  again  shortly,  and  is 
going  on  as  before.  It  has  a  banking  house  which  cost  over 
$^0,000. 


Gen.  John  A.  Logan  was  once  a  zealous  Greenbacker — 
which  is  nothing  to  his  discredit,  as  many  of  the  ablest  men 
of  which  the  Republican  party  can  boast  were  Greenbackers. 
On  January  19,  1874,  Logan  made  one  of  his  roaring  speeches 


178  OUR  MONEY  WARS. 

in  Congress  against  the  resumption  of  specie  payment,  and 
making  gold  a  monetary  standard.  He  said  "The  Green- 
back is  the  true  standard  of  value,  and  gold  is  merely  an 
article  of  commerce." 

Must  Trade  It  Out  Over  the  Counter. — Secretary 
Boutwell  testified  in  the  Senate,  January  22,  1874,  that  when 
$121,000,000  coin  accumulated  in  the  Bank  of  England  to  the 
credit  of  the  United  States, — from  bond  sales, — the  bank 
notified  our  Treasury  Department  that  its  whole  power  would 
be  usect  to  prevent  our  taking  it  in  that  shape.  "So,"  says 
Boutwell,  "  we  were  compelled  to  take  other  bonds."  The 
same  game  was  played  with  the  $15,000,000  of  the  Geneva 
award.  J.  G.  Drew  said  in  1874,  "We  now  find  that  we  have 
parted  with  about  one  billion  dollars  of  our  National  bonds 
to  Europe,  exhausting  ourselves  of  currency  even  to  do  our 
daily  marketing,  to  make  up  the  pile  ;  and  that  it  is  there 
in  Europe  ;  for  which,  as  by  the  foregoing  testimony  of  Prof. 
Price  and  Secretary  Boutwell,  we  can  get  no  specie  ;  but  any 
amount  of  dry-goods  and  knick-knacks." 

Pulling  Down  the  American  Flag. — It  was  by  such 
touching  appeals  as  this  from  poor  old  Poppy  Dix,  that  Grant 
was  induced  to  re-rivet  the  chains  upon  this  people. 

State  of  New  York,  Executive  Chamber, 

Albany,  March  30,  1874. 

My  Dear  Sir, — I  am  very  much  concerned  on  account  of 
the  action  of  Congress  on  the  currency  question ;  and  I  can- 
not forbear  to  express  to  you  my  earnest  hope  that  you  will, 
by  the  interposition  of  your  veto,  prevent  the  disastrous  con- 
sequences which  must  result  from  any  further  increase  of  the 
paper  circulation. 

Money  can  now  be  borrowed  in  the  city  of  New  York,  on 
the  best  security,  at  four  and  five  per  cent,  interest.  I  believe 
I  speak  within  bounds  when  I  say  that  one-half  of  the  paper 
currency  of  the  country  is  absorbed  in  stock  and  real  estate 
speculations.  Every  addition  to  it  must  run  into  the  same 
channels,  and  only  serve  to  multiply  and  aggravate  prevail- 
ing evils.  The  action  of  the  Senate,  sustaining  the  action  of 
the  Mouse  of  Representatives,  has  already  degraded  legal- 
tender  notes  below  the  standard  of  specie  from  one  to  two 
per  cent,  more  than  before.  And  if  the  maximum  of  four  hun- 
dred millions  proposed  by  Congress  is  reached  by  further 


OUR  MONEY  WARS.  179 

issues,  I  am  confident  the  measure  will  bring  on,  within  the 
next  two  years,  a  revulsion,  which  will  be  fatal  to  your  ad- 
ministration, and  ruinous  to  the  interests  of  the  country,  if 
not  to  the  public  credit. 

John  A.  Dix. 

The  old  "  War  Governor "  was  thusly  doing  his  best  to 
"  pull  down  the  American  flag."  But  nobody  "  shot  him  on 
the  spot." 

Victorious  Grant  Conquered. — Congress,warned  by  the 
Panic,  passed,  early  in  April,  a  bill  authorizing  the  reissue  of 
the  $44,000,000  Greenbacks,  which  had  been  retired  ;  and 
fixing  the  amount  of  the  Greenbacks  at  $400,000,000.  This 
bill  was  denounced  by  the  money  power,  as  an  "inflation" 
measure  (see  Dix  Letter)  ;  and  accordingly  was  vetoed  by 
President  Grant,  April  22,  1874. 

.  The  story  of  the  way  in  which  Grant  first  snubbed  and 
then  yielded  to  the  bankers  in  1S74,  is  very  instructive.  It  is 
told  by  J.  G.  Drew,  in  "  Our  Money  Muss."  Frightened  into 
temporary  decency  by  the  panic  of  September,  1873,  Grant, 
in  Ids  December  message  made  an  elaborate  Greenback  and 
convertible  bond  argument,  with  the  following  points  :  1st.  A 
clear  avowal  that  specie  basis  can  only  be  "  reached  and  main- 
tained "  by  securing  the  foreign  balance  of  trade  in  our  favor. 
2d.  That  said  balance  of  trade  can  only  accrue  by  sufficient 
currency.  3d.  That  such  sufficient  currency  does  not  exist, 
even  for  the  dullest  part  of  the  year.  4th.  That  much  more 
currency  is  required  in  the  fall  and  winter  months.  5th.  That 
some  automatic  system  is  required  to  prevent  the  amount 
which  would  be  proper  for  the  active  season  from  glutting 
the  market  in  the  dull  period.  6th.  That  Government  should 
loan  the  amount  of  the  face  value  of  bonds  to  banks  at  four 
per  cent,  per  year,  payable  at  the  option  of  the  borrower. 
7th.  That  our  "  currency,  based  on  the  credit  of  the  nation,  is 
the  best  that  has  ever  been  devised,-'  and  comparing  it  with 
gold  itself. 

Congress,  in  April,  1874,  prepared  and  passed  a  pretty  good 
bill  in  accord  with  these  views.  Then  the  telegraph  flashed 
through  the  land  that  Wall  Street  was  up  in  arms.  There  was 
a  meeting  of  the  bankers,  etc.,  calling  upon  Grant  for  a  veto. 
Peter  Cooper  presided.  This  was  probably  the  last  time 
that  the  bullionists  got  the  old  man  to  play  figure-head  for 
them.     He  presently  came  out  as  a  Greenbacker.     After  that 


I  So  OUR  MONEY  WARS. 

the  "best  people"  called  him  "  a  superannuated  old  fool." 
At  first  Grant  snubbed  the  usurers.  He  remembered  how 
they  had  clamored  about  him  for  an  issue  of  $30,000,- 
000  Greenbacks,  to  tide  over  the  panic  of  the  preceding 
September  ;  and  now,  they  and  their  organs — such  as 
Harpers'  Weekly  and  the  Herald  were  ridiculing  and  lam- 
pooning the  very  ideas  promulgated  by  them  the  previous 
autumn. 

Meetings  of  the  oligarchists  were  promptly  called,  and 
proposed  action  is  thus  reported  to  the  World :  "  It  is  pro- 
posed to  co-operate  with  movements  already  on  foot  in  other 
States,  in  forming  leagues  throughout  the  country, — first  to 
unite  the  people  in  demanding  that  our  Government  shall 
redeem  every  pledge  it  has  given  regarding  its  financial  prom- 
ises ;  and  second,  to  make  clear  to  the  people  that  a  fixed 
standard  of  value  is  vital  to  every  department  of  labor  and 
trade ;  that  self-interest,  equally  with  common  honest)', 
demand  that  the  promise  to  re-establish  a  specie  basis  for 
currency  shall  be  kept.  This  work  requires  time,  patience, 
labor  and  money.  For  the  latter  we  now  appeal  to  all  who 
are  in  sympathy  with  us.  The  most  effective  speeches  and 
arguments  for  sound  finance  will  be  printed  and  distributed  , 
and  also  a  weekly  publication,  to  inform  the  people  fully 
upon  this  question.  Popular  lecturers  of  high  standing  and 
repute  are  needed  to  influence  public  opinion  ;  and  in  various 
other  ways  the  completion  of  the  organization  will  require 
funds.  This  question  of  finance  is  the  supreme  question  of 
the  hour;  and  we  should  consider  ourselves  the  political 
opponents  of  all  public  men  who  are  not  with  us  :  or  who  are 
even  undecided  upon  the  matter  of  public  faith  ;  and  resolve 
to  support  no  such  men  for  any  office  whatever." 

Political  ostracism  from  President  to  poundkeeper  ! 

Grant  could  not  stand  the  pressure,  and  backed  down,  and 
"took  it  all  back."  In  his  veto  message  he  says  that 
the  bill  theoretically  increases  the  volume  of  the  currency, 
and  adds  :  "  The  theory,  in  my  belief,  is  a  departure  from  the 
true  principle  of  finance,  national  interest,  national  obliga- 
tions to  creditors,  Congressional  promises,  party  pledges — 
on  the  part  of  both  political  parties — and  of  personal  views 
and  promises  made  by  me  in  every  annual  message  sent  to 
Congress,  and  in  each  inaugural  address." 

The  Public  Robbers  Lex  Go. — Private  investigation  had 


OUR  MONEY  WARS.  181 

unearthed  immense  robberies  of  the  Government, — reaching 
ioo  millions, — by  fraudulent  withholding  of  taxes  on  tobacco, 
whisky,  incomes,  railroads,  banks,  insurance  companies, 
legacies  and  successions,  for  seven  years.  The  regular  offi- 
cials had  not  time,  money,  or  proof  for  this  work.  So,  May 
8,  1S72,  a  law  was  passed — by  aid  of  the  Secretary  of  the 
Treasury — which  authorized  those  having  the  proof,  to  go 
ahead,  and  push  the  robbers  for  half  what  they  could  collect. 
These  parties  had  risked  their  lives  and  spent  much  money 
in  the  search. 

In  a  few  months  after  the  passage  of  the  law,  they 
collected  $500,000 ;  and  would  probably  have  collected  50 
millions,  within  two  years,  without  suit.  But  the  money 
was  coming  from  rich  men, — capitalists,  corporations,  politi- 
cians and  bondholders, — some  of  whom  had  overruling  polit- 
ical influence.  Congress  was  besieged  to  repeal  the  law, 
that  the  collections  might  be  stopped,  and  both  were  done 
in  June,  1874  (Statutes,  pp.  18,192).  The  pretense  was  that 
the  officers  of  the  Government  ought  to  make  the  collections, 
without  cost  to  the  Government ;  when  Congress  knew  that 
most  of  the  claims  had  stood  without  assessment  or  collection, 
for  years,  and  that  the  Government  could  not  have  realized 
them  by  ordinary  methods  of  collection.  None  of  the  frauds 
detected  and  punished  by  Sec.  Bristow  would  have  been  com- 
mitted, but  for  the  repealing  of  this  law. 

National  Bank-note  Redemption. — The  Act  of  June  20, 
1874,  provides  that  National  banks  need  not  retain  money 
in  their  vaults  to  redeem  their  circulation  ;  though  they  were 
required  to  keep  money  for  their  deposits.  They  were  bound 
to  keep  five  per  cent,  in  money  in  the  Treasury,  in  legal 
tenders,  to  redeem  their  notes,  which  sum  amounted  to  about 
$17  000,000.  This  law  also  provided  that  when  banks  did  not 
wish  to  go  into  liquidation,  but  did  wish  to  sell  their  bonds 
at  a  large  premium,  they  could  by  depositing  legal-tender 
notes  in  the  Treasury  to  the  amount  of  their  circulation,  lift 
their  bonds  and  sell  them.  This  was  the  means  of  locking 
up  in  the  Treasury  a  large  amount  of  legal-tender  money, 
held  by  the  Treasury  to  redeem  National  bank-notes  ;  which 
the  Treasurer  could  do  or  not  as  the  Secretary  saw  proper. 
This  arrangement  kept  the  bank  notes  out  and  the  legal- 
tender  notes  in.  This  law  also  enabled  the  stockholders  of 
banks  to  sell  their  bonds  (the  most  of  which  cost  $40  and  $50 


1 82  OUR  MONEY  WARS. 

on  the  $100)  for  $120,  and  returned  them  their  10  per  cent, 
of  bonds  over  circulation.  After  the  bonds  were  lifted  and 
sold,  the  Government  and  the  people  had  no  security  for  the 
National  bank-notes  but  the  legal-tender  notes  to  the  same 
amount.  We  would  infer  from  this  that  the  legal  tenders 
were  better  than  the  bonds,  in  the  estimation  of  Congress. 
Why  not  bank  upon  legal  tenders,  therefore,  instead  of 
bonds  ? 

The  Value  of  Convertible  Currency. — That  noted 
financier,  Wm.  H.  Winder,  said,  July,  1874,  in  the  N.  Y.  News, 
which  he  used  as  his  organ  (paying  for  the  printing  of  his 
articles)  : — The  reader  will  bear  in  mind  that,  for  the  pur- 
pose of  rendering  suspension  of  specie  payments  an  impos- 
sibility, and  to  make  steadiness  assured,  so  that  no  tempta- 
tion to  undue  expansion  could  be  indulged  in,  the  law  known 
as  the  "  Peel  "  Act  was  passed,  in  England,  in  1844  ;  by  which 
the  Bank  was  prohibited  from  issuing  any  more  notes,  except 
upon  the  actual  previous  deposit  of  one  dollar  in  gold  for 
every  dollar  of  paper  which  should  be  thereafter  issued. 
And,  in  order  to  render  this  provision  effectual,  the  gold  thus 
deposited  was  held,  not  by  the  Bank,  but  by  an  officer  who 
held  it  for  the  sole  and  only  purpose  of  redeeming  notes 
issued  by  the  Bank. 

All  this  was  in  the  creditor  country  of  the  world.  England 
had  claims  on  her  debtor  countries,  over  and  above  all 
she  owed,  of  more  than  $3,000,000,000  ;  a  sum  five  times 
over  all  the  gold  in  all  the  banks  of  the  world  :  besides  which, 
the  Peel  Act  required  the  deposit  of  a  dollar  of  gold  for 
every  dollar  of  paper  thereafter  issued.  Yet,  with  supreme 
advantages  in  every  respect,  necessary  to  make  a  convertible 
currency  permanent,  assured,  steady,  free  from  fluctuations, 
and  a  safeguard  against  industrial  and  commercial  disasters, 
read  what  the  Parliamentary  Committee  say  of  a  convertible 
currency,  after  the  Panic  of  1847  : 

"  It  is  true  that  to  those  who  may  have  expected  that  the 
7  and  8  Vict.,  cap.  32  (Peel's  Act  requiring  the  Bank  to  keep 
specie  to  redeem  her  bills),  would  effectually  prevent  recur- 
rence of  cycles  of  commercial  excitement  and  depression, 
the  contrast  between  the  years  1845  and  1847  must  produce 
grievous  disappointment. 

"  To  those  who  anticipated  that  the  act  would  put  a  check 
on  improvident  speculation,  the  disappointment  cannot  be 


OUR  MONEY  WARS.  183 

less,  if  reliance  is  to  be  placed  (as  its  committee  are  confident 
it  may)  on  the  statement  of  the  governor  of  the  Bank  and  of 
other  witnesses,  that  speculations  were  never  carried  to  such 
enormous  extent  as  in  1846  and  the  beginning  of  1847. 

"  If  the  act  were  relied  on  as  a  security  against  violent 
fluctuations  in  the  value  of  money,  the  fallaciousness  of  such 
anticipation  is  conclusively  proved  by  the  fact  that  while  the 
difference  between  the  highest  and  lowest  rates  of  discount 
was,  in  the  calamitous  years  of  1837  an<^  I&39>  but  two  and 
a  quarter  to  two  and  three-quarters  per  cent.,  the  difference 
in  1S47  rose  to  six  and  three-quarters. 

"  If  it  was  contemplated  that  the  number  and  extent  of 
commercial  failures  would  have  been  lessened,  the  deplorable 
narrative  of  the  governor  of  the  Bank,  recording  the  failure 
of  ^^  houses,  comparatively  in  large  business,  in  London 
alone,  to  the  amount  of  ^"40,000,000,  is  a  conclusive  reply. 

"  If  the  power  of  obtaining  banking  accommodation  on 
moderate  terms  was  considered  to  be  promoted  by  the  acts 
of  1844,  it  cannot  be  said  that  this  important  object  has  been 
attained  ;  since  it  appears  in  evidence,  that  in  1847,  m  addi- 
tion to  an  interest  of  nine  or  ten  per  cent.,  a  commission  was 
also  frequently  paid,  raising  the  charge  to  ten,  twenty  or 
thirty  per  cent.,  according  to  the  time  which  bills  had  to  run." 

Thus  it  will  be  seen  that  this  committee  (like  the  com- 
mittee during  the  suspension,  1797  to  182 1,  of  the  Bank) 
reports  that  a  convertible  currency  secures  no  benefit  what- 
ever over  a  properly  guarded  paper  currency.  But,  on  the 
contrary,  the  famous  "  Bullion  Committee," — appointed  to 
prove  the  great  advantages  which  would  accrue  to  Great 
Britain  by  an  immediate  or  early  resumption,  so  as  to  render 
the  currency  "  convertible,"  in  their  report  state  explicitly 
that  the  history  of  convertible  currency  shows  it  has  never 
prevented  any  evil,  has  never  secured  any  advantage  over 
their  paper  currency  ;  but  that  the  reverse  is  true  ;  the  his- 
tory of  the  currency  during  suspension  of  specie  payment 
would  compare  favorably  with  the  periods  of  convertible 
currency.  It  is  true  a  boundless  or  unlimited  issue  of  paper 
currency  may  culminate  in  great  disasters  ;  but  a  judicious 
control  of  paper  and  of  loans  by  banks,  can,  beyond  all  pos- 
sibility of  denial,  secure  a  steadiness  of  volume  and  a  security 
against  all  those  evils  caused  by  a  fluctuation  of  volume, 
which  is  utterly  unattainable  by  a  convertible  currency. 


j84  our  money  wars. 

Bank  Currency  for  Sixty  Years. — Under  date  August 
1 1,  1874,  P.  Muncy  sent  a  strong  letter  to  N.  Y.  Tribune, 
advocating  Greenbacks.  He  gave  these  statistics  of  expan- 
sion and  contraction  from  181 1  to  1873, — as  giving  an  im- 
portant cause  of  periodical  commercial  crashes: 
Bank  currency  in   181 1 $28,000,000 

"         "  "     1816 68,000,000 

Contraction  1816  to  1820 23,000,000 

Bank  currency  in  "      45,000,000 

"         "  "  1837 141,000,000 

Contraction  1837  to  1843 83,000,000 

Bank  currency  in  ':      58,000,000 

"         "  "  1854 204,000,000 

Contraction  1854  to  1858 49,000,000 

Bank  currency  in  "      155,000,000 

"         "  "  1S60 207,000,000 

Contraction  i860  to  1862 23,000,000 

Bank  currency  in  "      184,000,000 

"         "  "  1S63 202,000,000 

Total  amount  of  money,  currency  and  circulating  medium 
on  Sept.  1,  1865,  exclusive  of  coin  : 

[Differing  only  from  Moses  W.  Field  (who  was  probably 
right)  in  the  amount  of  National  bank-notes,  he  makes  this]  : 

$214,678,680 
Circulating  Medium,  Dec.  1,  1873 765,679,685 

Contraction  Sept.  1,  1865,  to  Dec.  1,  1873.  .  .  .$1,345,998,995 
The  above  amount  of  circulating  medium  thus  contracted 
was  placed  into  bonds  bearing  six  per  cent,  interest  per 
annum  in  gold,  which,  in  a  great  measure,  took  from  the 
people  facility  of  carrying  on  business,  and  is  manifestly  the 
cause  of  the  crash  which  commenced  in  October,  187 1,  and 
culminated  in  September,  1873,  causing  the  ruin  of  thousands 
upon  thousands  of  business  men. 

$2,100,000,000  of  circulating  medium  in  1865,  gave  a  won- 
derful impetus  to  business,  and  enabled  the  people  to  pay 
enormous  amounts  of  taxation.  The  amount  of  money 
accounts  for  the  unexampled  "  prosperous  times,"  at  the 
close  of  a  very  destructive  civil  war  ;  which  prosperous  times 
would  doubtless  have  continued  but  for  the  fearful  contrac- 
tion of  nearly  $1,400,000,000  of  circulating  medium. 

The  Three  Per  Cents. — Wm.  D.  Kelley  said  in  1875  : — 


OUR  MONEY  WARS.  185 

Americans  had  shown  their  willingness  to  loan  the  Govern- 
ment at  three  per  cent.,  so  long  as  the  Government  would 
promise  to  return  the  money  whenever  they  wanted  it.  The 
three  per  cent,  certificates  were  convertible  bonds.  The 
Government  took  $120,000,000,  on  the  terms  that,  at  any  time 
after  ten  days,  the  depositor  or  his  transferee,  could  call  for 
the  money  deposited  with  accrued  interest.  These  three  per 
cent,  convertible  certificates  or  bonds  were  never  voluntarily 
presented  for  redemption  ;  and  finally,  under  McCulloch's 
process  of  contraction  and  the  cry  for  specie  payments,  Con- 
gress forced  the  Secretary  of  the  Treasury  to  call  in  and  re- 
deem that  three  per  cent,  currency  loan,  though  he  had  to 
sell  five  per  cent,  gold  bonds  to  get  the  money  with  which  to 
do  it  [Laughter.]  That  is  so.  So,  too,  gold  bonds  were  issued 
to  get  the  money  with  which  to  redeem  the  7-30's,  compound 
'interest  notes,  and  other  forms  of  currency  indebtedness. 
The  American  people  were,  as  I  have  said,  willing  to  loan  the 
Government  for  proper  interest  and  at  low  rates.  There  are 
$64,000,000  of  bonds  now  outstanding  which  always  com- 
mand the  highest  price,  or  stand  next  to  the  highest  in  the 
list  of  sales.  Yet  they  are  payable,  principal  and  interest,  in 
currency.  They  are  long  tax  bonds.  They  had  50  years  to 
run  when  issued  ;  and  every  fool  knew  that  specie  would 
enter  into  our  currency  before  50  years  would  pass  ;  and 
these  currency  bonds  stand  at  the  head  of  the  market.  That 
they  stand  there  is  absolute  proof  that  the  American  people 
were,  so  long  as  they  were  permitted  to  be  prosperous;  ready 
to  hold  the  national  debt,  and  to  hold  it  with  proper  interest. 
Why  were  they  not  permitted  to  hold  it  ?  There  was  no 
room  for  speculation  under  that  system.  No  sending  syndi- 
cate agents  to  Europe  [Applause].  No  commissions  to  be 
made  by  dealing  with  foreign  bankers  ;  or  by  Indiana  men 
who  might  go  to  London  to  establish  banking-houses 
[Applause]. 

Horrors  of  Resumption. — After  the  Resumption  misery 
was  fairly  started,  a  candid  observer  wrote: — Every  country 
merchant  would  tell  you  that  his  old  accounts  were  being 
paid  up  in  1865,6;  that  monthly  his  cash  sales,  as  compared 
with  credit,  were  increasing.  Every  city  merchant  would  tell 
you  that  six  months'  men  were  buying  on  four  months — that 
four  months'  men  were  buying  on  two  months,  and  the  two 
months'  men   were  buying  for   cash  ;  and   that  we   were  fast 


l86  OUR  MONEY  WARS. 

eliminating  credit,  with  its  attendant  extravagance  and  hor- 
rors, and  getting  on  a  money  basis. 

Now,  the  reverse  is  true.  The  capitalist  no  longer  seeks 
the  borrower,  but  the  latter  must  find  the  former,  spider-like 
in  his  den,  giving  audience  to  crowds  of  anxious  applicants, 
the  last  overbidding  his  predecessors,  and  promising  five 
times  the  earnings  of  money  for  its  use.  The  country  mer- 
chant finds  his  ledger  crowded  worse  than  ever  ;  the  whole- 
sale dealer  tells  you  that  we  have  flopped  back  to  much  worse 
than  the  old  times.  Even  Boston  feels  the  pressure  ;  as 
evinced  by  the  following  extract  from  the  Globe  of  that  city  : 
As  facts  and  truth  are  the  basis  of  all  sound  reasoning,  I 
will  relate  some  items  of  my  own  experience  within  the  last 
few  weeks.  While  in  the  office  of  a  money  agent  and  lender, 
a  gentleman  came  in  and  made  application  for  a  temporary 
loan  on  some  houses  he  was  building  ;  and  on  which,  when 
finished,  he  was  to  have  a  permanent  loan.  The  security 
was  satisfactory,  he  could  have  the  money,  but  not  for  less 
than  two  per  cent,  per  month.  They  were  getting  that  for 
short  loans.  A  clay  or  two  after,  speaking  with  a  gentleman 
on  the  contraction  of  the  currency,  and  of  business,  he  men- 
tioned a  near  relative  of  his  whom  he  had  just  learned  had, 
for  four  months,  been  paying  $15  a  month  for  the  use  of  $300, 
with  everything  in  his  house,  gifts  of  friendship  and  all, 
mortgaged  for  its  security.  But  business  was  dull,  and  his 
receipts  less  than  his  expenses,  and  his  family  in  need.  My 
own  business  had  led  me,  a  few  weeks  before,  to  look  at  the 
public  records  of  mortgages  of  personal  property,  in  refer- 
ence to  a  tenant  who  wished  to  give  security  for  his  rent.  I 
found  all  the  machinery  and  apparatus  of  his  trade  (he  was 
a  good  mechanic)  mortgaged  to  procure  a  loan  at  three  per 
cent,  per  month.  He  said  he  must  have  some  money  ;  busi- 
ness was  dull,  and  could  find  no  one  who  would  let  him  have 
it  for  less.  I  took  occasion  to  look  over  the  recent  record  of 
mortgages  ;  and  saw  records  to  secure  loans  as  high  as  five 
per  cent,  per  month  ;  and  the  register  remarked  that  some 
had  been  as  high  as  ten  per.  cent.  He  thought  they  would 
average  three  per.  cent  a  month.  His  humanity  found  ex- 
pression in  the  words,  "  It  is  awful  !  "  *  *  * 

Who  Use  Savings  Banks. — One  great  argument  against 
the  demands  of  workingmen  is  found  in  the  vast  sums 
deposited   in   these   banks,  and  supposed  to  belong   to   the 


OUR  MONEY  WARS.  187 

workers.  Geo.  E.  McNeill  brought  clown  the  wrath  of  the 
monopolists  upon  him  by  showing,  while  at  the  head  of  the 
Massachusetts  Labor  Bureau,  that  the  money  belongs  mainly 
to  well-off  people.  In  1875  even  the  N.  Y.  Tribune  confessed 
this  as  follows  : — The  aggregate  amount  clue  to  the  depositors 
in  158  savings-banks  of  this  State  now  reaches  the  enormous 
total  of  $304,000,000 — having  increased  $18,400,000  from 
January  1,  1874,  to  January  1,  1875.  This  seems  an  aston- 
ishing sum,  and  doubtless  many  persons  find  it  difficult  to 
account  for  so  large  an  increase  in  twelvemonths  of  such  de- 
pression as  now  prevails  in  almost  every  branch  of  trade  and 
industry.  The  fact  is  that  the  depositors  in  savings-banks 
are  far  from  being  confined  to  the  humbler  walks  of  life. 
The  mass  of  deposits  is  owned  by  persons  of  the  middle-class 
— by  those  who  are  generally  recognized  by  their  friends  as 
"  well-off." 


An  editor  said  in  1S75  : — There  is  no  comfort  in  the  re- 
flection that  we  have  had  hard  times  in  this  country  before, 
and  survived  them.  The  debts  are  the  great  obstacles  at 
present.  There  were  hard  times  in  1840  and  1857,  and  at 
other  times  ;  but  then  there  was  little  or  no  debt  or  taxes. 
There  were  no  railroad  debts  then.  There  was  but  little  Gov- 
ernment debt  then.  There  were  no  municipal  debts  then, 
and  taxes  were  hardly  felt.     It  is  not  so  now. 


H.  Bronson  said  in  1875  : — I  do  not  understand  why  an 
inanimate  dollar  is  not  as  fit  a  subject  for  conscription  as  a 
human  soul.  We  laid  our  Governmental  strong  hands  upon 
the  fathers  and  sons,  perhaps  the  main-stay  of  the  household, 
and  left  their  bones  to  bleach  upon  the  battlefield  :  then  we 
got  on  our  knees  to  borrow  from  the  bondholder  ragged  dol- 
lars for  our  gold  bonds,  upon  his  own  terms  ;  when  he  should 
have  been  sent  to  the  front,  money-bags  and  all.  We  issued 
Greenbacks — "  dishonest  money  "  to  buy  human  life  with  and 
gold-bearing  bonds  to  buy  shoddy.  We  took  the  income  tax 
from  shoddy,  and  put  a  heavy  tax  upon  the  returned  soldiers' 
shirts,  boots,  coffee  and  tobacco,  to  raise  gold  for  the  bond- 
holder ;  and  thus,  whether  the  soldier  fell  in  battle  or  returned 
to  his  humble  home,  he  dies  or  lives  for  the  bondholder ! 

What  the  Hi/ngry  Democrats  Did. — The  Panic  of  1873 
resulted  in  the  Democrats  getting  a  majority  in  the  House  ui 


1 88  OUR  MONEY  WARS. 

Representatives  in  Congress,  in  the  Fall  of  1874.  I3nt,  after 
all  their  blowing  against  the  Republicans — the  hungry  creat- 
ures at  once,  with  cheerful  alacrity,  sold  out  to  the  money- 
kings  :  and  began  by  electing  Kerr,  a  gold-bug  speaker.  They 
did  even  worse  than  the  Republicans.  They  showed  their 
caliber  again  on  the  silver  question,  under  Cleveland. 

A  National  Debt  a  National  Blessing. — In  1874,  Henry 
Carey  Baird  printed  the  following  very  striking  and  original 
argument  in  favor  of  the  idea  that  "a  national  debt  is  a  na- 
tional blessing : " — 

One  might  naturally  infer  that  a  measure  which  had 
proved  itself  so  powerful  and  so  beneficent  in  the  hour  of 
national  trial,  amid  war  and  destruction,  might  be  equally 
so  in  peace,  in  building  up  that  which  war  had  pulled  down. 
Not  so,  however,  have  thought  our  great  finance  ministers 
and  other  statesmen — our  McCullochs,  Boutwells,  Richard- 
sons,  Shermans,  Joneses  and  Grants !  As  soon  as,  by  the 
combined  operations  of  a  cessation  of  war  and  of  the  wring- 
ing of  taxes  from  the  people,  the  National  Treasury  had  be- 
come strong  enough  to  have  no  fear  for  its  own  future, — and 
giving  no  heed  whatsoever  to  the  people, — the  Greenback  was 
denounced  as  a  "forced  loan,"  inflated,  irredeemable  paper, 
etc.,  etc;  and  efforts,  to  some  extent  successful,  were  made 
to  retire  it.  The  consequences  have  been  nine  years  of 
societary  paralysis,  which  has  cost  the  country  ten  times  the 
pecuniary  cost  of  the  war ;  and  left  the  people  so  much 
prostrated,  and  in  such  a  state  of  financial  exhaustion,  that 
they  are  unable  any  longer  to  carry  the  indebtedness  of  their 
Government ;  which  latter  is  now  obliged,  in  peace,  to  call 
upon  foreign  credit-mongers  to  do  for  it  that  which,  in  the 
midst  of  war  and  ruin,  its  own  people  were  able  to  do,  and 
did  with  so  much  alacrity.  Seeing,  then,  how  much  more 
ruinous  than  war  itself  are  incompetent  rulers,  when  their 
hands  are  not  tied  by  the  force  of  public  necessities  and 
considerations,  is  it  in  the  least  to  be  wondered  at,  that 
the  idea  should  have  gone  abroad  that  a  "  national  debt ", — 
when  so  great  and  so  pressing  as  to  overrule  and  control  the 
ignorance  and  incompetence  of  public  officials, — is  "  a  national 
blessing." 

The  President  of  Metropolitan  Bank  Speaks  Out. — 
John  G.  Drew  said  in  1874  : — And  that  a,  currency  famine 
does  exist,  we  demonstrate  by  another  quotation  from  John 


OUR  MONEY  WARS.  189 

Earl  Williams,  whose  position  as  President  of  the  Metro- 
politan Bank,  the  redeeming  center  for  the  country  banks, 
gives  him  a  better  chance  to  judge  than,  perhaps,  any  other 
man  in  America.  He  said:  "And  most  prominent  of  all 
the  vain  efforts  to  resume  specie  payments  by  banks,  as  here- 
tofore, including  alike  bills  and  deposits ;  which  always  has 
been,  and,  in  the  nature  of  things,  always  must  be,  sooner  or 
later,  a  failure." 

Drew  vs.  Wells. — John  G.  Drew  said  in  1S74,  of  the 
enormous  cost  of  Resumption,  and  in  reply  to  David  A. 
Wells  : — Mr.  Wells  is  an  excellent  mathematician.  He  can 
undo  much  of  the  mischief  which  he  and  his  school  have 
done,  if  he  will  figure  what  the  cost  of  our  war  would  have 
been  with  full  legal-tender  as  taught  and  practiced  by  French 
statesmen  ;  and  then  compare  the  same  with  our  disburse- 
ment footing.  After  obtaining  that  result,  multiply  each 
day,  for  the  past  three  years,  by  five  millions,  which  is  the 
minimum  cost  per  day,  in  dollars,  for  the  enforced  idleness 
of  our  productive  industries.  Add  those  two  results  together, 
and  he  will  have  an  approximation  to  the  cost  to  date  for 
this  war  of  the  specie  advocates  upon  the  nation.  It  has 
already  cost  the  nation  five  times  what  slavery  cost  us  to 
subdue  it ;  and  the  end  is  not  yet. 

What  is  the  plainer  English  of  this  very  plain  English  ? 
It  is  this  :  That  while  our  producers  have  begged,  almost 
on  their  bended  knees,  for  the  privilege  of  the  right  to  labor, 
and  to  be  paid  for  the  same  in  national  certificates  of  indebt- 
edness, called  Greenbacks,  without  interest  :  our  infatuated 
Government  has  insisted  on  having  its  work  done  by  subjects 
of  European  monarchies,  and  to  pay  for  the  same  in  interest- 
bearing  bonds :  and  that  our  mechanics  are  leaving  our 
shores  to  find  that  employment  which  we  have  banished 
across  the  ocean.  If  that  has  not  been  practically  levying  a 
tariff  upon  our  home  productions,  or  offering  a  bonus  for 
foreign  importations,  we  have  forgotten  what  little  cyphering 
we  ever  knew.  *  *  *  The  British  Lion,  having  thus  seduced 
us  by  gentle  roaring,  moral  precepts  and  big  scientific  de- 
monstrations, to  thus  drop  our  national  resources  into  his 
open  jaw's,  he  shuts  them  together  with  a  snap;  and  when 
we  demand  our  specie,  we  are  laughed  at  for  gulls,  and  told 
to  "  go  to  the  store  and  trade  it  out  "  ! 

Gold,  Flour  and  Beef. — -The  following  statistics  compiled 


190  OUR  MONEY  WARS. 

by  W.  Kimball  of  New  Haven,  Conn.,  show  the  price  of 
gold,  flour  and  beef,  from  i860  to  1874;  during  which  period 
the  volume  of  currency  swelled  from  about  $400,000,000  to 
near  $2,000,000,000;  and  was  contracted  again  to  $779,000,- 
000  ;  and  the  gold  dollar  fluctuated  all  the  way  from  $1.00 
to  $2.85. 

Beef 

$10.75 

9.00 

12.00 

12.50 

20.00 
19.00 

I3-S° 

15.00 

14.00 
14.00 
12.50 
10.00 
11.00 

IO-37 
Five  Million  Dollars  a  Day  Lost. — J.  G.  Drew  said  in 

1874  : — The  productive  capacity  of  the  nation,  with  anything 

like  a  fair  chance,  is  indicated  by  the  census  $7,000,000,000 

per  year  :  or,  in  round  numbers,  $20,000,000  per   day.     The 

loss  by  the  present  enforced  stagnation,  is  variously  estimated 

at  from  one-fourth  to  one-half  that  sum.      Take   the   smaller 

figure,  one-quarter,  and  we  find  that  we  are  paying  $5,000,000 

per  day  for  the  luxury   of   our  present   idleness,  bankruptcy 

and  starvation  ;  equal,  as  above   stated,  to   the  cost   of  the 

late  war  on  both  sides,  at  the  time  of  its  greatest  intensity. 

At  great  cost,  we   convulsed   all   civilization  for  years,  to 

obtain    an    indemnity   from    England    of    $15,000,000;  and 

glorified    our    Government  for   the  achievement;  while   the 

same  Government  was  wickedly  exhausting  the  nation  to  the 

same  extent  every  three  days  1 

1875. 

The  Resumption  Act  Scorched. — Judge  W.  Martin 
gave  a  scathing  review  of  the  Resumption  Act  of  January  14, 
1875,    in  his  "  Money    of    Nations."     He   bewails    the   first 


Gold 

Flour 

i860 

% 

1. 00 

$5-25 

1861 

1. 00 

5-5o 

1862 

1. 00 

to  1.37 

5-47 

1863 

i-37 

to  1.72^ 

5-87 

1864 

1.72 

to  2.85I 

6.30 

1865 

i.46£ 

9.72 

1866 

1. 41 

7.60 

1867 

i-37 

9.42 

1868 

1.36 

8.70 

1869 

1.24 

S-7o 

1870 

I. TO 

4.92 

1871 

I.08 

5-5° 

1872 

I. II 

6.00 

1873 

1. 12 

5-55 

1874 

!-I3 

5-95 

OUR  MONEY  WARS.  191 

provision  of  the  act,  which  calls  in  the  45  million  frac- 
tional currency  and  substitutes  silver  at  a  cost  of  $2,500,000 
per  annum.  He  says  : — Thus  we  see  that  a  bullion  and 
bond-worshiping  Congress  fought  and  still  fight  to  the  death 
the  payment  of  bonds  in  silver  of  full  weight  :  and  insist  that 
the  people  shall  use  a  subsidiary  money,- — seven  per  cent, 
light, — and  pay  five  per  cent,  per  annum  for  the  privilege  of 
using  it.  It  is  true,  with  Congress,  as  Senator  Sherman 
said,     "  The  gold  is  for  the  rich  and  the  silver  for  the  poor." 

*  *  So  is  it  in  England,  where  gold  is  the  money  of  the  rich  ; 
and  worn,  sweatee!  and  clipped  and  light  subsidiary  silver  and 
heavy  copper  coins  is  the  money  of  the  poor. 

The  second  provides  that  gold  bullion  shall  be  coined 
free  :  but  makes  no  provision  for  the  recoinage  of  the  worn 
silver. 

•  Section  3  repeals  the  law  limiting  the  National  bank  cir- 
culation. All  disguise  is  thrown  off.  As  fast  as  National 
bank-notes  are  issued,  legal  tenders,  to  the  amount  of  80  per 
cent,  thereof  are  to  be  redeemed.  400  millions  of  five  per  cent, 
bonds  were  to  be  sold  for  this  purpose. 

On  and  after  January  1879,  the  300  million  legal  tenders 
must  be  redeemed  in  coin.  The  5,  4^  and  4  per  cent,  bonds 
would  cover  this  redemption.  There  was  to  be  an  annual 
tax  of  $38,200,000  (bond  interest)  to  rob  the  people  of  the  best 
money  they  ever  had. 

There  is  no  provision  for  redeeming  the  National  bank- 
notes. They  knew  well  that  resumption  did  not  apply  to 
them.  They  had  $8,000,000  gold,  to  a  billion  liabilities. 
They  now  sold  their  gold — having  no  farther  use  for  it. 

Dead  Wendell  Phillips  Speaketh. — Here  speaks  Wen- 
dell Phillips  on  Resumption  : — The  money  kings  and  coin 
mongers  of  London  and  New  York  are  the  thieves.  Watch- 
ful and  keen,  they  saw  at  the  end  of  the  war  that  our  bonds 
were  the  best  investment  in  the  world  ;  and  that  our  finances 
could  be  most  easily  wrenched  to  make  the  rich  richer,  and 
to  crush  the  poor  into  slavery.  Joining  in  conspiracy,  and 
shutting  Boston  and  Philadelphia  out  of  the  scheme,  they 
proceeded  to  derange  our  currency — demonetize  silver — and 
to  change  the  basis  and  conditions  of  our  bonds  :  so  as  to 
double  their  own  wealth,  and  double  the  weight  of  our 
national  debt,  leading  our  obsolete  financiers,  wise  in  their 
own  conceit,  a  fools'  chase.  *  *  *  But  is  God  dead  ?     Have 


192  OUR  MONEY  WARS. 

seed-time  and  harvest  failed  ?  Has  the  hand  of  man  lost  its 
cunning?  Does  this  blight  cover  the  whole  world?  No! 
there  is  a  nation  which  a  merciless  foe  has  just  trampled  in 
the  dust,  eating  up  and  carrying  off  its  garnered  wealth.  Ex- 
hausted with  this  foreign  drain,  civil  war  is  eating  out  her 
strength.  Angry  parties  stand  ready  to  fly  at  each  other's 
throats.  By  all  the  rules  that  obsolete  political  economy 
prates  and  babbles  about,  the  people  of  such  a  nation  ought 
to  be  starving.  Her  ships  idle,  her  granaries  empty,  her  trade 
annihilated.  Not  so  !  That  nation  is  France.  France  has 
just  paid  suffering  Germany  $1,000,000,000.  Her  chief  cities 
have  been  sacked  and  plundered — humiliated  by  defeat,  torn 
by  civil  dissensions,  she  laughs,  while  all  the  rest  of 
Christendom  wade  through  the  mire  of  bankruptcy.  Her 
ships  are  full  busy  :  and  what  little  other  nations  do,  is  in 
carrying  to  and  fro  her  manufactures.  Her  homes  are 
happy,  her  streets  crowded  with  passing  trains  laden  with 
goods  ;  all  her  mills  hurrying  night  and  day,  to  get  even  with 
the  demand  upon  them.  Labor  walks  rejoicing,  and  capital 
sleeps  easy,  fat  with  its  gains.  What  magician  has  done 
this  ?  Paper  Money.  Like  the  rest  of  the  nations  she  ran 
to  its  protection  during  the  stress  and  storm  of  her  German 
war.  Unlike  and  wiser  than  the  rest  of  us,  she  has  not 
hurried  back  to  coin.  Wiser  than  we,  she  received  the  paper 
that  she  offered  to  others.  That  honesty  had  its  reward. 
Her  paper  is  to-day  more  valuable  than  gold,  and  she  strides 
valiantly  forward  in  her  path  to  wealth  and  peace,  spite  of  all 
drawbacks.  Now,  if  fanaticism  is  feeling  without  facts,  and 
wisdom  means  facts  governing  theories,  which  party  are  the 
fanatics,  and  which  are  the  wise  men  ? 


Judge  Kelley  said,  in  a  speech  in  1875  : — What  has  pro- 
duced this  unhappy  condition  of  affairs  ?  My  friends,  it  is 
self-imposed.  It  is  the  result  of  our  devotion  to  an  idea — 
to  an  abstraction.  There  are  millions  of  us  who  think  that 
Andrew  Jackson  is  still  President,  and  still  fighting  the 
United  States  Bank  ;  and  that  we  ought,  therefore,  to  go  for 
hard  money.  This  is  neither  jest  nor  exaggeration.  We 
meet  men  daily  who  say  "  I  am  a  Jackson  man,  and  I  go  for 
hard  money."  I  have  met  50  such.  Then  there  are  theo- 
rists, doctrinaires  as  they  are  pleased  to  be  called  :  who  pooh- 
pooh  at  me  as  a   sort  of  responsible  lunatic,  who  has  never 


OUR  MONEY  WARS.  193 

read  the  "  Bullion  Report/'  or  the  writings  of  such  flatulent 
egotists  as  Bonamy  Price  of  Oxford.  They  cry,  "  consider 
what  Ricardo  says."  Well,  consider  what  Ricardo  says  and 
who  he  was.  He  was  a  bond  and  bullion  monger  and 
argued  his  own  cause.  I  have  studied  his  theories,  and 
denounce  them  as  selfish  fallacies.  I  go  for  what  old  Ben 
Franklin  says — Ben  Franklin,  who  has  more  wisdom  in  his 
great  toe  than  Ricardo  had  in  his  brain  ;  and  less  selfishness 
in  his  whole  body  than  Ricardo  had  in  his  great  toe. 

I  am  a  follower  of  Benjamin  Franklin  and  Horace  Greeley 
on  this  currency  question.  Mr.  Greeley,  notwithstanding  the 
fact  that  the  Tribune,  founded  by  him,  by  turns  satirizes  or 
denounces  my  opinions  on  this  question,  was  the  first  man 
to  convince  me  of  the  propriety  and  necessity  of  resorting  to 
the  interconvertible  bond  system.  *  * .  *  Who  was  Ricardo  ? 
He  was  a  banker  who,  being  rich,  secured  an  election  to  Par- 
liament, and  did  for  himself  and  Robert  Peel,  the  son  of  the 
first  Sir  Robert  Peel,  and  other  British  bond-holders,  what 
Congress  is  doing  for  the  banks  and  other  holders  of  our 
bonds  of  to-day — transferring  the  property  of  the  men  of  toil 
and  of  enterprise  to  men  of  bonds  and  gold.  The  Peel 
family  has  had  its  story  ;  and  it  should  be  studied  by  every 
American  farmer,  manufacturer  and  laborer. 

The  first  Sir  Robert  Peel  was  a  manufacturer  of  fabrics, 
and  contracted  for  clothing  the  army.  He  was  a  patriot; 
and  proved  his  loyalty  by  putting  all  his  profits  into  the 
depreciated  bonds  of  the  Government.  He  said,  "  I  stand 
with  the  Government,  and,  make  or  lose,  I  give  it  the  use  of  my 
capital."  And  when  the  war  was  over,  he  was  one  of  the 
heaviest  holders  of  the  national  debt.  He  and  his  son,  Mr. 
Robert  Peel,  were  both  in  Parliament.  The  son  united  with 
Ricardo,  in  forcing  through  the  act  providing  for  the  resump- 
tion of  specie  payment  at  the  end  of  four  years  ;  of  which 
the  act  passed  by  Congress  is,  in  good  measure,  a  copy. 
They  carried  it,  and  Sir  Robert,  who  had  stoutly  opposed  it, 
said  to  his  son,  "  Robert,  you  have  made  the  fortunes  of 
your  family,  but  you  have  ruined  your  country."  And  it  was 
so.  The  bonds  went  up,  and  factory  and  every  other  species 
of  productive  property  went  down.  The  Peels  and  Ricardo 
sold  at  par  the  bonds  they  had  bought  at  40  per  cent.;  and 
put  the  proceeds  into  real  estate  at  one-quarter  or  one- 
fifth  of  its  intrinsic  value.     In  these  facts  you  have  the  secret 


194  OUR  MONEY  WARS. 

of  the  great  landed  estate  of  the  Peel  family  ;  and  an  illustra- 
tion of  the  method  by  which  the  landed  property  of  this 
country  is  to  be  concentrated  in  a  few  families.  Men  who 
bought  our  bonds  at  40  per  cent,  are  howling  for  resumption  ; 
in  order  that  they  may  get  100  for  them  ;  and  that  factories, 
farms  and  mines  may  be  without  marketable  value,  until  they 
shall  come  to  own  them,  and  again  set  industry  in  motion  by 
expanding  bank  credits. 

Debtor  and  Creditor  Nations. — Win.  H.  Winder,  now 
dead,  has  been  our  greatest  authority  upon  the  relations  of 
debtor  and  creditor  nations.  In  1875  he  spoke  in  his  hot,  just 
wrath  thus  : — After  describing  how  we  fought  through  the 
war  without  foreign  aid,  and  our  wisdom  in  so  doing,  he  said  ; 
Is  not  this  position  impregnable  ?  Just  here  comes  in  that 
ever  damnable  foreign  influence,  which  has  always  been  the 
bane  of  fiscal  policy.  As  usual,  that  greediest  of  creditors, 
London,  struck  up  the  cuckoo  note  of  specie  payment  and 
depreciated  currency;  and  the  wonderful,  the  vital  importance 
of  a  good  credit  in  that  great  banking  center  ;  which  credit, 
it  was  alleged,  must  be  sought  only  by  a  return  to  specie 
payments,  through  the  channel  of  contraction  ;  although  the 
whole  distance  should  be  lined  with  an  endless  series  of 
wrecks.  The  asses  in  this  country  brayed  forth  from  a  thous- 
and throats  the  same  mad  doctrine.  The  parties  under 
foreign  tutelage, — some  willfully  dishonest,  many  honest, — 
would  not  listen  to  the  suggestion  that  all  values  had  ac- 
commodated themselves  to  the  increased  volume  of  cur- 
rency ;  and  that  to  change  it  by  a  series  of  contractions  would 
be  a  general  slaughter  of  all  values,  for  the  sole  benefit  of 
monied  men  and  the  foreigner ;  that  a  steady  contraction 
was  synonymous  with  the  gradual  but  inevitable  smothering 
of  the  industries  at  work  ;  and  a  perfectly  assured  guarantee 
of  failure  and  disaster  to  all  new  enterprises  which  might  be 
inaugurated  in  a  shrinking  market ;  that,  as  we  had  prospered, 
as  employment  was  abundant  and  profitable  to  all  under  the 
currency,  as  it  then  stood  ;  if  left  alone,  there  was  assurance 
of  a  continued  activity. 

But  these  knaves  and  madmen  were  deaf  to  every  appeal 
of  reason  and  experience  ;  and  would  listen  to  no  other 
suggestions  than  those  from  London,  which  said,  if  you  want 
any  high  credit  here,  you  must  forthwith  return  to  specie 
payment.     To    court   favor  with   London,  not    being  able 


OUR  MONEY  IV. IKS.  195 

forthwith  to  resume  specie  payment,  these  wise  men,  being 
in  Congress,  and  urged  on  by  the  false  teaching  of  the 
foreigner;  and  under  the  delusion  of  being  able  to  secure, 
in  the  future,  loans  in  London, — made  the  greatest  sacrifice 
of  the  rights  and  interests  of  the  people  of  the  United  States, 
which  the  world  has  ever  known  one  country  voluntarily  to 
make  to  another  ;  and  without  the  shadow  of  consideration 
therefor.  In  the  preposterous  expectation  of  propitiating 
the  foreigner  to  make  future  loans,  should  this  Government 
ever  need  foreign  loans,  Congress  voluntarily,  wantonly, 
wickedly,  committed  a  most  gigantic  fraud  on  the  rights  and 
interests  of  the  people,  by  changing  the  redemption  of  the 
bonds  from  Greenbacks  into  gold,  and  inaugurating  a  silly 
and  most  pernicious  contraction. 

Thus,  this  was  the  source  of  all  our  woes.  The  result 
was,  the  foreigner  purchased  our  gold  bonds  at  about  40  to 
50  per  cent.  ;  and  paid  for  every  dollar  of  them  in  commodi- 
ties— not  a  cent  of  money  was  ever  received  here.  Then 
contraction  began  to  choke  our  industries  ;  and  the  foreigner 
getting  our  bonds  at  40  to  60,  could  pay  us  in  commodities, 
at  rates  which  would  undersell  our  producers.  By  means  of 
the  accursed  legislation  of  Congress, — in  contraction  and 
changing  payment  of  bonds  from  Greenbacks  into  gold, — 
we  were  seduced  to  purchase  three  billion  of  dollars  of 
commodities  from  the  foreigner  more  than  he  purchased 
from  us.  We  paid  by  a  thousand  millions  in  gold,  and 
two  thousand  millions  in,  gold-paying  securities.  The 
addition  of  this  thousand  million  of  gold  to  the  foreign 
market  gave  rise  to  vast  money  enterprises ;  and  the 
purchase  of  three  thousand  millions  of  commodities  by  us, 
gave  extraordinary  activity  and  prosperity  to  the  foreign  in- 
dustries. The  thousand  million  of  gold  enabled  the  creditor 
countries  of  Europe  to  lend  money  toother  countries;  which 
countries,  like  the  United  States,  also  negotiated  their  bunds, 
to  great  extent,  and  received  in  return  commodities,  as  did 
the  United  States.  If  these  countries  of  Europe  had  con- 
tinued to  take  our  securities  and  the  securities  of  other  debt,  r 
States,  the  seeming  prosperity  would  have  continued.  But 
a  stop  having  been  put  to  any  further  purchases  of  bonds  ; 
and.  a  demand  being  made  for  the  payment  of  many  of 
those  already  had  by  the  foreigner;  a  sudden  stop  has  been 
put  to  this  state  of  things  ;  and  we  and  all  debtor  countries, 


196  OUR  MONEY  WARS. 

find  ourselves  plunged,  necessarily,  into  all  the  troubles 
which  envelope  us.  The  immense  demand  for  commodities 
from  the  foreign  creditors  has  ceased  ;  and  consequently  his 
industries  feel  the  loss  of  custom,  and  have  suffered.  These 
are  the  so  natural  consequences  of  that  frightful  legislation 
of  Congress,  that  no  one  can  close  his  eyes  to  the  truth  of 
it.  [He  then  showed  that  to  get  out  of  debt  we  must  make 
our  exports  greater  than  our  imports.  He  saw  with  wonder- 
ful clearness  the  relations  of  debtor  and  creditor  nations  ; 
but  had  not  the  widest  vision  in  other  respects.] 

In  another  article  he  says : — Under  a  decision  of  the 
Supreme  Court  that  coined  metal  or  bullion  alone  is  money, 
this  fact  would  stand  transparent,  that  every  dollar  of  money 
in  the  country  would  virtually  belong  to  the  foreigner ;  and 
we  should  be  indebted  to  his  policy  or  indulgence  for  what- 
ever portion  of  it  might  remain  ;  it  would  in  truth  and  in  fact 
be  a  loan  on  call  by  the  foreigner.  This  statement  is  unquali- 
fiedly true  as  it  is  pregnant. 

The  corollary  is  that  a  decision  by  the  Supreme  Court  that 
the  Constitution  restricts  both  Federal  and  State  Govern- 
ments from  acknowledging  or  constituting  anything  as  money, 
save  and  except  coined  bullion,  is  to  convict  the  framers 
of  the  Federal  Constitution  of  the  stultification  of  rendering  the 
people  of  the  United  States  wholly  and  helplessly  dependent 
upon  the  foreigner's  policy  or  caprice  for  every  dollar  of 
money.  They  are  inexorably  excluded  from  any  money  ex- 
cept what  the  foreigner  may  vouchsafe  to  lend  and  recall  at 
will.  [The  British  thus  seized  all  our  money  before  the 
Revolution. — S.  L.] 

It  may  be  said  that  since  the  peace  of  1814-15  the  for- 
eigner has  owned  our  bullion  ;  aud  our  experience  from  that 
time  to  1863  has  been  that  about  every  five  or  seven  years 
he  has  exercised  his  right  of  ownership  by  draining  our 
bullion  ;  and  causing  perturbations  and  convulsions  in  our 
money  market  to  such  an  extent,  that  the  result  may  be 
safely  stated  to  be  the  failure  of  95  per  cent,  of  all  parties 
engaged  in  business,  including  the  periodical  crushing  of  our 
manufactures.  Amos  Lawrence,  of  Boston,  in  his  diary, 
states  as  the  result  of  his  observations,  among  his  own  ac- 
quaintances, that  97  per  cent,  of  them  succumbed.  This 
fearful  record  of  the  foreigner's  fatal  power  over  all  our  in- 
terests, given  him  by  limiting  ourselves  to  metal  money,  was 


OUR  MONEY  WARS.  197 

during  a  period  when  our  indebtedness  to  the  foreigner 
rarely,  if  ever,  exceeded  200  millions  of  dollars.  What,  we 
significantly  ask,  may  not  be  apprehended  from  that  same 
foreigner,  with  a  claim  against  us  of  ten  times  that  amount  ? 

Again  the  right  to  issue  bills  of  credit  is  as  inalienable  as 
it  is  an  indispensable  attribute  of  sovereignty ;  and  as  it  is 
expressly  denied  to  the  States,  must,  as  a  matter  of  course, 
reside  in  the  Federal  Constitution. 

Solon  Chase  and  Them  Steers. — This  earnest  worker, 
who  started  the  Greenback  movement  in  Maine,  and  long 
fought  manfully  against  fusion  there,  was  popular  enough 
to  be  a  prominent  candidate  for  nomination  to  the  Presi- 
dency by  the  Greenback  Labor  Convention  of  1880.  The 
following  description  of  his  ideas  is  by  Judge  Kelley: — In 
illustration  of  this  point,  and  as  a  further  demonstration  of 
the  effect  of  contraction  upon  the  condition  of  the  farmers 
of  the  country,  let  me  recall  an  interview  I  had  with  Mr. 
Solon  Chase,  of  Maine,  during  a  day  that  he  did  me  the 
honor  to  pass  under  my  roof,  when  returning  to  his  home 
from  a  Western  stumping  tour.  I  had  seen  in  New  England 
papers  many  allusions  to  "  Solon's  heifer  "  ;  and  in  his  own 
paper  the  assertion  that  the  same  stroke  that  had  struck 
"  Solon's  heifer",  had  struck  a  savings-bank  or  other  corpo- 
ration that  had  failed ;  and  at  a  later  day  I  had  found  occa- 
sional allusions  to  "  Solon's  Steers  "  ;  and  I  took  the  liberty 
of  inquiring  of  Mr.  Chase  whether  they  were  his  heifer  and 
his  steers  that  had  become  so  famous  ;  and,  if  so,  what  made 
them  remarkable  ?  He  said  that  there  was  nothing  remark- 
able about  the  heifer,  except  that  he  had  given  it  some  promi- 
nence by  making  it  an  example  to  his  brother-farmers  of  the 
double  wickedness  of  the  contraction  policy. 

He  also  said,  in  substance,  that  having  been  a  hard-money 
man,  and  spent  some  months  in  endeavoring  to  answer  a 
Congressional  speech  against  contraction,  he  had  seen  that 
the  arguments  of  that  speech  were  unanswerable,  and  had 
set  about  starting  a  Greenback  movement  in  Maine.  His 
efforts,  for  the  first  year,  were  confined  chiefly  to  his  own 
county,  and,  indeed,  largely  to  the  towns  of  Turner  and 
Buckfield,  the  people  of  which  were  farmers.  Their  land 
was  poor,  their  season  short,  their  products  few  and  simple  ; 
but,  as  a  means  of  increasing  their  gain,  it  was  customary 
among  them  to  keep  breeding-stock  for  the  dairy  and  farm 


igS  OUR  MONEY  WARS. 

use ;  and  instead  of  selling  their  hay  to  advance  it  into 
meat.  They  never  sold  a  calf  for  young  veal,  if  they  could 
advance  it  to  a.  yearling  ;  or  the  yearling,  if  the  demand 
for  money  or  taxes  Or  other  imperative  purposes  would  per- 
mit them  to  feed  it  until  it  should,  as  a  two-year  old,  be 
worth  more  than  twice  the  price  of  a  yearling.  When,  how- 
ever, he  attempted  to  sell  his  then  last  two-year  old,  he  had 
found  that  he  could  get  no  more  for  her  than  he  could  have 
got  a  year  before.  He  also  found  that  this  was  true  of  all 
the  other  two-year  olds  in  the  neighborhood  So,  going  be- 
fore his  neighbors,  he  told  the  story  of  his  heifer,  and  asked 
them  whether  it  was  not  the  story  of  their  two-year  olds  ; 
and  when  answered  in  the  affirmative,  he  asked  them,  "Who 
gets  the  hay  ?  For  whom  have  we  worked  ?  We  have  fed 
these  heifers  and  tended  them  for  a  year,  and  have  done  it 
for  the  benefit  of  somebody.  We  have  not  enriched  the 
town,  or  county,  or  State.  I  have  not  worked  for  my  poor 
blind  boy  whose  eyes,  as  you  know,  were  shot  out  while 
fighting  for  the  maintenance  of  the  nation  ;  or  for  other 
members  of  my  family-  yet  you  and  I  have  worked,  and 
worked  faithfully.  Our  land  has  yielded,  and  yielded  well  ; 
but  who  takes  the  yield  of  our  labor  and  our  land  ?  Let  us 
see  if  we  can  find  out.  As  we  must  sell  our  two-year  olds 
for  what  was  freely  offered  a  year  ago  for  yearlings,  some- 
body is  benefited.  As  we  can  get  but  one-half  the  value  of 
our  products,  the  man  who  buys  them  takes  two  dollars 
worth  for  one  ;  and  it  is  for  him,  whether  his  capital  be  in- 
vested in  National  banks  or  in  the  untaxed  bonds  of  the 
Government,  for  whom  we  work.  Our  toil  and  enterprise 
do  but  impoverish  us,  while  the  idle  rich  man,  who  buries 
his  money,  or  puts  it  in  a  vault,  grows  rich  at  the  rate  of  ioo 
per  cent,  per  annum.  Labor,  enterprise  and  production 
have  thus  become  the  road  to  poverty ;  and  all  capitalists 
are  warned  that  the  true  way,  the  rapid  road  to  wealth,  is  to 
withdraw  capital  from  productive  business  and  put  it  into 
bank-stock  or  untaxed  bonds." 

The  story  of  Solon's  steers  was  an  equally  apt  illustration 
of  his  whole  argument.  It  was  this  :  In  1875,  he  was  at- 
tracted by  the  beauty  and  symmetry  of  a  yoke  of  three-year- 
old  steers,  and  bought  them,  as  he  and  his  neighbors  thought, 
at  a  great  bargain,  for  $100.  I  was  delighted  with  the  en- 
thusiasm this  simple  fanner  exhibited  when  he  spoke  of  the 


OUR  MONEY  WARS. 


199 


beauty,  docility  and  strength  of  those  steers.  They  had  for 
two  years  been  objects  of  his  care  and  solicitude.  They 
were  to  win  him  the  approval  of  his  fellow-citizens,  if  not  a 
premium  at  a  State  fair ;  and,  when  five  years  old,  were  ac- 
cordingly exhibited  at  such  fair  and  commanded  universal 
admiration.  The  time  had  now  come  to  sell  them,  and  he 
attempted  to  do  so,  and  found  that  $90  was  the  highest  sum 
offered  for  them.  He  had  fed  and  cared  for  and  disciplined 
them  through  two  of  the  long  winters  of  Maine,  and  two  of 
her  short  and  fruitless  summers  ;  and  the  net  result  of  all 
his  labors,  tested  by  the  market  values  of  1875  and  1877, 
was  the  loss  of  $10,  of  the  little  stock  of  ready  money  he 
had  been  able  to  command  in  the  former  year.  Another 
political  campaign  had  opened  ;  and  he  went  again  to  his 
fellow-citizens  asking  them,  who  had  got  the  hay  or  was  to 
get  it ?  For  whom  were  they  at  work?  Who  gathered  in 
the  fruits  of  their  land  and  labor,  as  effectually  as  though 
they  owned  the  land,  and  employed  the  farmers  to  work  it, 
or  rented  it  to  them  as  tenant  farmers  under  the  British  sys- 
tem of  agriculture  ?  And,  again,  as  he  said,  he  pointed  out 
to  them,  how  contraction  impoverished  labor,  and  swelled 
the  profits  of  capital,  and  was  building  up  a  plutocracy  in 
the  United  States,  which  must  not  only  be  dangerous  to 
popular  liberty,  but  promised  to  rival  in  splendor  the  pluto- 
cracy of  England.  With  the  inevitable  results  of  Mr.  McCul- 
loch's  financial  policy, —  in  obedience  to  which  the  resump- 
tion act  was  passed  and  maintained, — so  pertinently  illus- 
trated by  this  farmer,  is  it  wonderful  that  more  than  43,000 
citizens  of  Maine  sundered  old  party  ties,  and  sought  to 
emancipate  themselves,  and  the  country,  from  a  system 
which  is  ruining  them,  and  threatening  their  liberties  and 
those  of  their  posterity  ? 

Gold  Bug  Tricks. — During  the  long  agony  that  preceded 
gold  resumption,  all  sorts  of  subterfuges  were  used  by  the 
wretches  who  caused  the  agony,  to  hoodwink  the  people. 
Judge  Kelley  showed  in  1875,  that  the  statement  that  the 
Secretary  of  the  Treasury  was  selling  surplus  gold,  at  the 
rate  of  $5,000,000  per  month,  was  humbug.  He  would  make 
such  an  announcement,  because  he  would  not  get  enough 
currency  from  the  revenues  to  meet  expenses,  and  so  sold 
some  of  his  little  hoard  of  gold,  which  he  was  trying  to  save 
for  resumption  in  1879. 


200  OUR  MONEY  WARS. 

Ben  Butler  and  Butler  Duncan. — Gen.  B.  F.  Butler,  in 
August  1875,  said,  in  his  response  to  an  invitation  to  address 
the  N.  Y.  Legal  Tender  Club  : — "  Regretting  that  I  cannot 
be  with  you  and  elaborate  these  views,  as  1  should  be  glad 
to  do  in  New  York  City  ; — whose  docks  are  deserted  by 
shipping,  whose  stores  are  unrented,  and  whose  dwelling- 
houses  have  been  so  depreciated  as  hardly  to  meet  the  mort- 
gages upon  them  ;  and  where,  I  think,  sound  financial  doc- 
trines are  as  much  needed  as  anywhere  ; — my  necessities  com- 
pel me  to  forego  this,  which  would  be  a  pleasure  to  me,  and, 
I  trust  a  profit  to  others.  I  am  informed  that  Mr.  Duncan, 
of  Duncan,  Sherman  &  Co.,  went  to  Washington  when  the 
currency  bill  was  before  the  President,  to  advise  him  to  veto 
it ;  because  it  was  necessary  to  depreciate  values.  The 
President  did  veto  the  bill.  Values  have  been  depreciated, 
I  trust,  to  an  amount  entirely  satisfactory  to  Messrs.  Duncan, 
Sherman  &  Co.,  however  little  their  creditors  may  relish  the 
process  ! 

"  I  have  the  honor  to  be,  very  truly  yours, 

"  Benj.  F.  Butler." 

I  was  walking  in  Nassau  Street,  New  York,  at  the  moment 
when  the  news  of  the  failure  of  Duncan,  Sherman  &  Co., 
struck  the  "  Street."  The  instant  rushing  to  and  fro  of  men 
and  boys,  which  continued  for  hours,  reminded  me  of  the 
frantic  motions  of  a  colony  of  ants,  when  the  flat  stone  under 
which  they  lived  has  been  turned  over.  All  push,  loaded 
and  unloaded,  for  a  new  hiding-place. 

Monopoly's  Pandemonium  in  California.  —  One  of 
the  most  disastrous  exhibitions  of  human  greed  ever  seen 
in  this  countiy,  took  place  on  the  Pacific  coast  in  1S75. 
It  le.-ulted  in  transferring  the  greater  part  of  the  wealth 
of  California  into  the  hands  of  a  few  individuals,  who  have 
ever  since  borne  down  on  the  people  of  that  State  with 
such  relentless  oppression,  that  revolution  has  been  imminent, 
and  was  only  prevented  by  the  partial  success  of  the  people 
at  the  ballot-box,  in  thwarting  the  designs  of  their  oppressors, 
and  staying  them  in  their  unbridled  career  of  robbery. 
-  These  speculations,  be  it  remembered,  were  not  based  on 
paper  money  of  any  kind,  nor  on  silver.  Neither  were  they 
based  on  a  redundancy  of  money  of  any  kind ;  for  the  total 
amount  of  currency  of  all  kinds  in  circulation,  and  held  as 


OUR  MONEY  WARS.  201 

reserves  (as  shown  by  the  report  of  the  Secretary  of  the 
Treasury)  only  amounted  to  $773,646,728.69. 

These  speculations  and  grabbings,  wild  as  they  were,  were 
based  upon  gold  banks  and  gold  bank  credits,  and  a  cur- 
rency contracted  to  a  specie  basis.  The  remedy  for  the  pre- 
vention of  wild  speculation  and  extravagant  indebtedness 
must  be  sought  in  some  other  direction  than  contraction  to 
the  specie  basis  or  gold  standard. 

I  have  given  a  full  account  of  this  epoch  in  California  in 
"  The  Cyclopedia  of  Money  and  Finance." 

Greenbackers  Organized. — On  December  1,  1875,  the 
Greenback  party  was  first  formally  organized  in  Farwell 
Hall,  Chicago.  Strong  Greenback  and  Anti-Monopoly  reso- 
lutions were  passed.  Chairmen  of  State  committees  were 
appointed.  Samuel  Leavitt  is  proud  of  the  fact  that  he  was 
•  appointed  for  New  York  State. 

1876 

Frantic  Diabolism. — Here  is  a  specimen  of  the  frantic 
diabolism  with  which  such  papers  as  the  N.  Y.  Tribune  were 
driving  the  nation  through  the  dark  valley  in  the  "  hard 
times."  This  editorial  is  from  the  Tribune  of  January,  1876. 
It  is  written  with  the  fanatical  zeal  of  a  heretic-burning  Tor- 
quemada.  I  know  of  no  man  more  likely  to  write  such  rot 
than  W.  M.  Grosvenor,  once  of  St.  Louis.  He  really  seems  to 
think  in  that  way.  "  Non  tali  auxitio,  nee  defensoribus  istis, 
tempus  egitr 

[N.  B.  Fourteen  years  later,  in  1890,  I  find  that  Gros- 
venor is  an  editor  of  the  Tril>////<\] 

"  How  long,  O  Cataline,  wilt  thou  abuse  our  patience  ? " 

Congress  and  Contraction. — "  Go,  my  son,  and  learn  with 
how  little  wisdom  the  world  is  governed  !  "  The  counsel  of 
the  French  father  has  lost  none  of  its  force.  The  American 
who  wishes  to  learn  how  stupidly  it  is  possible  to  act,  in  deal- 
ing with  the  affairs  of  a  great  nation,  must  visit  Washington, 
and  talk  with  members  of  Congress  about  the  money  ques- 
tion. Contraction  is  the  great  bugbear.  Everybody  is  afraid 
of  it,  and  the  average  member  would  about  as  soon  think  of 
jumping  from  the  railing  that  surmounts  the  dome  of  the 
capitol,  as  of  defending  contraction  in  any  form  or  degree. 
Rascally  demagogues  have  joined  with  timid  and  unreason- 
ing business-men,  to  make  the  people  believe  that  any  reduc- 


2  02  OUR  MONEY  WARS. 

tion  in  the  volume  of  the  currency  would  bring  indescribable 
horrors.  A  vast  number  of  persons,  whose  sincerity  of  pur- 
pose is  as  obvious  as  their  want  of  information,  and  whose 
ignorance  is  past  hope  of  cure,  because  they  fancy  that  they 
perfectly  understand  the  whole  subject, — join  in  a  clamor 
against  any  form  of  contraction.  Congress  was  elected  at  a 
time  when  this  panic  was  at  its  worst ;  and  fully  represents 
all  its  most  stupid  phases.  And  this  is  the  body  of  men  by 
whom  the  welfare  and  honor  of  the  country  are  to  be  guarded, 
so  far  as  they  depend  upon  legislation. 

Accordingly,  whether  a  member  calls  himself  an  inflation- 
ist or  a  resumptionist,  he  usually  begins  and  ends  his  state- 
ment by  declaring  his  unalterable  hostility  to  contraction.  It 
is  a  most  disheartening  fact,  that  the  few  sane  men  in  Con- 
gress— who  know  what  the  country  needs — are  often  too 
timid  to  confront  what  they  suppose  to  be  a  settled  public 
conviction  ;  and  so  they  go  about  seeking  for  some  mode  of 
"  resuming  specie  payments  without  contraction."  Cursed 
for  eight  years  by  the  theory  of  Mr.  Boutwell — that  it  is  pos- 
sible to  "grow  up  to  specie  payments," — the  country  counts 
the  7,000  commercial  wrecks  which  that  bit  of  financial 
idiocy  has  caused  within  a  single  year,  and  yet  fails  to  see 
that  mere  standing  still  involves  ruin,  because  it  involves 
prolonged  and  fatal  uncertainty.  It  is  perfectly  marvelous 
that  members  of  Congress — many  of  whom  must  knoAV,  as 
practical  business  men,  that  this  uncertainty  does  more  harm 
to  trade  than  could  be  dune  by  any  settled  policy  whatever 
— cannot  be  made  to  see  that  doing  nothing  is  the  very 
worst  thing.  Bankruptcy  and  repudiation  are  the  worst  re- 
sults, and  prolonged  uncertainty  is  bringing  these  with  ter- 
rible certainty. 

This  land  cries  out  in  agony  for  a  ruler  [hear  !  hear  ! — S.L.] 
One  man  of  wisdom  and  power — who  would  give  the  country 
a  settled  financial  policy — would  be  worth  more  than  can  be 
computed  in  millions.  But  the  country  looks  to  Congress, 
thus  far  in  vain.  The  hard-money  Democrats  in  the  House 
are  so  overawed  and  overpowered  by  their  associates  that 
they  even  talk  of  repealing  and  repudiating  the  pledge  of  resump- 
tion [ah  !]  ;  and  propose,  of  all  conceivable  methods,  exactly 
that  which  everybody  knows  must  be  the  most  harmful  in 
operation  and  the  most  uncertain  of  success — the  slow  accu- 
mulation of  a  monstrous  hoard  of  idle  coin.      Meanwhile,  all 


OUR  MONEY  WARS. 


'■°3 


the  small  demagogues  are  preparing  their  speeches  against 
contraction  ;  and  all  the  half-statesmen  are  getting  ready  to 
say,  with  fear  and  trembling,  "  Let  us  try  to  resume  without 
contraction,"  Where  is  the  man  who  will  have  the  sense 
and  the  courage  to  defend  stoutly  the  manly  policy  which  the 
Secretary  of  the  Treasury  suggests  ?  Who  will  show  what  it 
means,  and  why  it  meets  the  necessities  of  our  condition,  as 
no  other  yet  advocated  does  ?  If  such  a  man  should  come 
forward,  with  the  pluck  to  tell  the  people  what  they  ought  to 
know  and  to  do — and  with  the  ability  to  make  even  a  dull  Con- 
gress listen  and  understand — who  can  measure  the  good  that 
he  can  do  ?  But  the  country  waits  ;  uncertainty  continues  ; 
doubt  slaughters  merchants  and  manufacturers  every  week  ; 
hope  dies  away,  and  the  last  opportunity  of  saving  the  honor 
and  restoring  the  prosperity  of  the  nation,  by  legislation,  be- 
fore the  next  Presidential  upturning,  are  vanishing  fast.  There 
is  a  strong  and  clear-headed  man  at  the  Treasury.  But  what 
he  will  have  power  to  do  no  man  can  say  until  Congress  has 
adjourned.  [The  Chicago  Tribune  never  now  utters  a  more 
infernal  tirade  than  that.] 

Gladstone  vs.  Gold  Basis. — James  Harvey,  of  England, 
wrote  thus  in  1S78  : — Even  Mr.  Gladstone,  the  chosen  dis- 
ciple of  Sir  Robert  Peel,  could  plainly  see  that  this  gold  sys- 
tem would  not  work,  and  that  periodical  panic  showed  it  to 
be  wrong  in  principle,  and  therefore  impracticable  in  the 
working.  These  were  his  words  in  February,  1876,  two 
months  before  the  Gurney  Panic,  which  took  place  in  May: 
"  The  bill  (of  1S44)  cannot  stand  as  it  is.  I  cannot  consent 
•"hat  trade  should  be  devastated  by  these  continually  recur- 
ring convulsions.  The  bill  of  1844,  damaged  in  1847,  was 
utterly  shattered  in  1857." 

Harvey  adds  : — May  I  ask  Mr.  Gladstone  what  was  its 
state  after  the  panic  of  1866?  The  Bank  of  England  was 
saved  by  the  interposition  of  the  Minister,  who  allowed  it  to 
issue  interconvertible  paper  (this  for  the  third  time)  ;  and 
yet  by  Peel's  bill  to  be  unable  to  pay  your  debt  in  gold  is — 
bankruptcy. 

Trade  Dollar  Repudiated. — A  joint  resolution  of  Con- 
gress approved  July  22,  1876,  provides  that  "The  trade  dol- 
lar shall  not  hereafter  be  a  legal  tender." 

Postal  Currency  Gone. — The  Acts  of  April  17,  and  of 
July  22,  1876,  provided  for  $50,,, 000000  subsidiary  silver  coin 


204  OUR  MONEY  WARS. 

to  redeem  fractional  paper  currency.  These  small  notes 
were  redeemable  in  legal  tender  notes,  in  sums  of  $5  and 
more.  It  was  an  outrage  upon  the  people  to  impose  this 
silver  money  upon  them  at  a  cost  of  $2,500,000  a  year,  for 
such  a  purpose.  The  silver  money,  under  the  law  creating 
it,  was  not  redeemable  in  anything. 


John  G.  Drew  received  this  short,  sharp  and  decisive  note 
from  Mr.  Spinner,  late  U.  S.  Treasurer  : — 

Mohawk,  Aug.  17,  1876. 
Dear  Sir. — Your  letter  of  the  15th  inst.  has  been  received. 
In  answer,  I  have  to  say  that  the  7-30  Treasury  notes  were 
intended,  prepared,  issued  and  used  as  currency. 

Very  Resp'y  yours, 

F.  E.   Spinner. 


Secretary  Foster  and  7- 3o's.- — The  following,  added  in 
1893,  after  the  failure  of  "Calico  Charley,"   is  very  interest- 
ing reading.     We   know  now   why  Foster  was  so  anxious  to 
please  Wall  Street. 
To  the  Editor  of  The  Advocate. 

As  there  has  been  considerable  of  time  spent  and  writing 
done,  contradictions,  affirmations,  etc.,  in  regard  to  the  7-30 
Treasury  notes  being  used  as  money  and  circulated  as  a  part 
of  the  currency  of  the  country,  I  now  claim  to  have  positive 
proof,  Secretary  Foster  to  the  contrary  notwithstanding,  that 
they  were  used,  and  that  Secretary  Foster  used  them  him- 
self.    The  following  letters  will  explain  : — 

Jewell  City,  Kas.,  Oct.  3,  1892. 
Mr.  G.  L.  Daniels,  Gibsonburg,  Ohio. 

Dear  Sir. — I  understand  that  you  purchased  a  farm  from 
Mr.  Foster  (who  is  now  Secretary  of  the  United' States 
Treasury)  in  1SG6,  paying  him  7-30  notes  for  the  same.  En- 
closed find  stamp  for  reply,  and  you  will  do  me  a  favor  by 
answering  if  the  above  is  correct.  Give  a  detailed  answer  of 
purchase  and  payment,  and  oblige. 

Frank  R.  Forrest,  Jewell  City,  Kas. 

In  reply  to  the  above,  is  the  following  : — 

Gibsonburg,  Ohio,  Oct.  17,  1892. 
Mr.  Frank  R.  Forrest,  f swell  City,  Kas. 

Dear  Sir. — In  regard  to  enquiries  enclosed  to  me,  will  say 


OUR  MONEY  WARS-  205 

that  in  1S66  I  purchased  80  acres  of  unimproved  kind  of 
Hon.  (has.  Foster,  now  Secretary  of  the  United  States 
Treasury,  for  the  sum  of  $800,  and  a  part  of  first  payment 
was  made  in  7-30  notes  ;  the  exact  amount  I  have  forgotten, 
but  it  was  not  less  than  $150,  and  not  more  than  $200. 
After  Mr.  Foster  received  said  notes,  he  gave  me  a  $10  bill 
as  a  part  of  the  accumulated  interest.  I  do  not  know  how 
the  deal  between  Mr.  Foster  and  myself  ever  became  public, 
as  I  have  no  recollection  of  ever  mentioning  it  to  any  one, 
and  if  I  did  it  must  have  been  years  ago,  and  then  only  in  a 
casual  way,  viz  :  that  they  were  the  only  bonds  I  ever  saw. 

Respectfully, 

G.  L.  Daniels. 
The   above   is   an   exact   copy,  verbatim  et  literatim,  and  I 
have  the  genuine  letter  in  my  possession.     Any  one  doubting 
'the  same  can  write  the  Register  of  Deeds  of  Jewell  County, 
Mankato,  Kas. 

Frank  R.  Forrest. 


It  was  the  late  Gen.  Kilpatrick  who  immortalized  himself 
in  1876,  by  declaring  that  the  Greenbackers  of  Indiana  were 
"poor,  needy  and  in  debt-,  "  and  that  "  a  bloody  shirt  cam- 
paign, with  money,  and  Indiana  is  safe." 

Grant  does  Unintended  Good. — This  is  the  way  in 
which  the  New  York  Sun  talked  in  1876  about  the  Legal 
Tender  Decision  by  the  Supreme  Court  of  the  United  States. 
If  Grant  thought  that  he  was  playing  sharp  in  this  case 
(and  he  was  none  too  good  for  such  trickery),  he  simply 
stumbled  upon  the  perpetration  of  a  very  proper  deed  :  in 
appointing  judges  who  decided  lightly.  This  decision,  legal- 
izing the  Greenback  as  money,  was  one  of  the  best  things 
that  ever  happened  to  this  country.  The  Sun  said  :  "  In 
the  legal  tender  cases  did  not  General  Grant  pack  the  Su- 
preme Court  with  Bradley  and  Strong,  expressly  to  change  the 
former  decree,  while  the  record  was  still  fresh  ;  thus  post- 
poning specie  payments  for  years  ?  That  infamy  was  perpe- 
trated to  benefit  certain  corporations,  whose  obligations  for 
gold  payments  were  maturing.  They  paid  in  paper,  and 
pocketed  a  large  difference  by  this  scandalous  prostitution 
of  the  judiciary  to  a  selfish  end." 

Such  corporations  may  have  been  benefited  ;  but  the 
clamor  of  the  plain  people  for  justice  was  the  basic  cause  of 


206  OUR  MONEY  WARS. 

this  decision.  Hatred  of  Grant  blinded  Dana's  eyes  to  facts 
which  he  now  dimly  perceive". 

Foolish  Californians. — A  California  correspondent 
said  in  1S76  : — The  independent  papers  that  were  the  sup- 
porters of  Newton  Booth  have  not  dared  to  follow  in  his 
wake  on  the  Greenback  question  ;  and,  indeed,  it  would 
hardly  be  safe  to  do  so,  so  strong  are  the  prejudices  here 
in  favor  of  a  gold  currency,  among  all  classes  except  the 
farmers.  Even  in  the  country  towns,  the  traders — who  con- 
trol all  the  advertising — will  not  allow  the  local  press  to 
speak  out  upon  this  question.  The  working-classes,  and  all 
others  working  for  wages,  see  in  the  adoption  of  a  Green- 
back currency  for  California,  only  this — that  whereas  we 
now  receive  silver  for  our  wages,  at  only  three  to  four  per 
cent,  discount,  we  should  receive  the  same  sum  in  Green- 
backs at  twelve  per  cent,  discount ;  and  beyond  this  they 
cannot  reason.  They  do  not  see  that  a  high  rate  of  interest 
and  scarcity  of  money  paralyzes  our  industries.  The  loss  of 
population  during  the  Rebellion,  caused  by  rejecting  the 
legal-tender  currency,  was  too  apparent  to  escape  notice  ; 
but  the  money  monopolists  comfort  us  by  saying,  that,  though 
it  might  have  been  a  good  thing  then,  it  is  too  late  to  remedy 
the  evil  by  adopting  it  now.  They  whisper,  however,  that  to 
put  a  strict  construction  upon  our  refusal  to  receive  the 
notices  and  obligations  in  the  hour  of  her  peril,  was  giving 
aid  and  comfort  to  the  enemy  ;  and  was  therefore  treason  to 
our  country. 

Democrats  Repudiate  Resumption.— The  Democratic 
House  of  Representatives  passed  an  act  at  the  session  of 
1876,  repealing  the  Resumption  Act,  as  the  convention  in 
St.  Louis  required  should  be  done,  notwithstanding  the  oppo- 
sition of  a  few  Democratic  bondholders  and  advocates  of 
National  banks  ;  but  the  friends  of  the  British  bondholders 
prevented  its  passage  in  the  Senate. 

The  Bond  Age — $150,000,000,000. — The  interest-bearing 
burden  of  Europe  and  America,  in  this  "  Bond  Age  ",  is  cal- 
culated at  at  least  one  hundred  and  fifty  thousand  million 
dollars.  A.  J.  Warner,  of  Ohio,  has  published  a  carefully 
prepared  statement  showing  the  increase  of  the  municipal 
indebtedness  alone,  of  the  United  States,  from  1866  to  1876. 
His  figures  giving  the  conditions  of  130  cities,  show  that, 
during  those  ten  years,   their  average  debt   was  increased 


OUR  MONEY  WARS. 


•07 


200  per  cent.  ;  taxation  83  per  cent.  ;  valuation  75  per  cent.  ; 
population  only  $?>  Per  cent. 

Coin  and  Bullion  in  Europe. — The  following  was  given 
as  the  gold,  silver  and  base  metal  coins  ;  and  gold  and  silver 
bullion  in  circulation  and  in  banks  in  all  Europe  about  1876  . 


SILVER  AND  BASE 
METAL. 


Great  Britain 

France 

Germany 

Austria 

Russia.  . 

Italy 

Spain 

Sweden 

Belgium 

Switzerland  

All  other  States  of  Europe 


442,500,000 
650,000,000 
380,000,000 


300,000.000 


80,000,000 

350,000,000 

370,000,000 

200,000,000 

250,000,000 

145,000,000 

200,000,000 

70,000,000 

38,000,000 

5,000,000 

360,000,000 


$1,772,500,000      $2,068,000,000 


1877. 

Money  Market  Easy  in  the  Hardest  Times. — In  or 
about  1877,  in  the  House  of  Representatives,  Judge  W.  D. 
Kelley  asked  the  house  to  wipe  out  the  ruinous  statute 
calling  for  Resumption  in  1879.  He  said  :  "  It  stood  a 
menace  to  confidence — the  steady  destroyer  of  credit.  It 
was  notice  to  every  capitalist  that  the  body  of  money  was  to 
be  contracted  ;  that  the  banks  must  hoard  specie  for  resump- 
tion ;  that  prices  must  fall ;  and  that,  therefore,  the  best  use 
for  money  was  to  bury  it,  either  in  their  own  cellars  or  in  the 
vaults  of  the  banks.  It  was  no  wonder,  therefore,  that  the 
gentleman  from  New  York  (Mr.  Chittenden)  could  say  yes- 
terday that  there  never  had  been  so  much  money  to  lend.  There 
was  no  use  for  money,  when  men  saw  that  that  which  they 
produced  must  be  sold  at  less  than  cost.  On  what  could 
men  borrow  money  ?  Could  they  borrow  money  in  Phila- 
delphia on  Reading  Railroad  stock,  on  Delaware  and  Lack- 
awanna,  on  Jersey  Central,  or  on  any  other  railroad  stock  ? 
Could  money  be  borrowed  on  farms,  factories,  forges  or  fur- 


2o8  OUR  MONEY  WARS. 

naces  ?  No  !  And  why  ?  Because  under  the  Resumption 
Act  their  value  must  shrink.  He  had  heard  of  moneyed 
institutions  in  New  York  that  were  not  only  foregoing  inter- 
est on  mortgages,  but  were  paying  the  taxes  on  the  mortgaged 
property,  rather  than  take  it  in  at  its  present  depreciated 
value,  and  thus  tie  up  their  working  capital.  He  knew  of 
similar  instances  in  Philadelphia.  He  knew  of  mortgagors 
who  were  begging  the  mortgagees  to  take  the  property,  and 
free  them  from  the  resulting  judgment,  which  would  blight 
the  hopes  of  their  future  life.  In  conclusion  he  said  :  Re- 
peal that  act ;  restore  confidence  ;  allow  the  tramps  and  the 
millions  of  working  men  and  women,  who  are  now  living  in 
despair,  to  go  to  work  on  your  raw  material,  and  supply  each 
other's  work.  No  nation,  no  individual,  was  ever  freed  from 
debt  by  idleness  and  want  of  industry.  Set  the  miners 
of  Pennsylvania  and  the  other  coal  States  at  work  in  pro- 
ducing power.  Let  the  coal  which  they  mine  quicken  your 
machinery.  Let  wages  be  earned  by  the  working-people, 
to  enable  them  to  pay  their  debts,  and  to  consume  dutiable 
and  taxable  commodities.  We  have  gone  at  this  thing  bull- 
headed  ;  and  have  thus  effectually  disabled  ourselves  ;  de- 
prived ourselves  of  confidence  ;  impoverished  our  people  ; 
diminished  the  revenues  of  the  Government,  and  put  our- 
selves in  a  position  that,  in  the  midst  of  abounding  crops, 
our  people  are  hungry.  With  our  cotton  (the  largest  crop 
that  we  ever  produced)  they  are  naked  or  in  rags.  77/e 
examples  of  France  are  worthy  tJie  study  of  American  statesmen. 
Let  them  study  those  examples — not  books  written  hy  pet  its 
niaiires, — men  who  hold  seats  in  colleges, — who  have  read 
Ricardo  or  Adam  Smith  ;  and  who  begin,  at  once,  like  an 
apothecary,  to  compound  prescriptions  for  sick  nations,  by 
putting  in  a  little  from  each  bottle,  and  giving  it  a  common 
title.  Take  the  management  of  a  nation ;  study  the  details 
of  history  for  a  series  of  years  ;  grasp  the  subject ;  remem- 
ber that  Hugh  McCulloch  does  not  know  what  a  boy  of  ten 
years  does  know — that  a  promise  to  pay  is  not  money.  I 
trust  that  no  other  citizen  of  Indiana  is  so  ignorant.  Re- 
member that  you  are  to  deal  with  five  thousand  millions  of 
indebtedness." 

The  Silver  Commission  and  the  Cause  of  Hard 
Times.  On  the  15th  of  August,  1876,  a  law  was  enacted 
creating  what  was  known  as  the  Monetary  Commission.     The 


OUR  MONEY  WARS.  209 

law  specified  various  duties  for  the  commission,  and  among 
others,  one  was  to  solve  the  question  of  the  disaster  of  '73  and 
the  fearfully  hard  times  and  sufferings  which  followed.  The 
commission  was  made  up  from  the  United  States  senate, 
John  P.  Jones,  Lewis  V.  Boggy  and  George  S.  Eoutwell. 
From  the  house  of  representatives,  Randall  L.  Gibson,  Geo. 
Willard  and  the  following  gentlemen  were  appointed  secre- 
taries :  Wm.  G.  Grosbeck  of  Ohio,  Prof.  Francis  Brown  of 
Massachusetts  and  George  M.  Weston  of  Maine.  This 
committee  held  meetings  in  all  the  principal  cities  of  the 
union,  exhausted  every  resource  that  was  possible  to  dis- 
cover the  cause  of  the  hard  times,  and  in  their  report  of  March 
2,  1877,  they  make  use  of  the  following  extraordinary  language  : 
"The  true  and  only  cause  of  the  stagnation  in  industries 
and  commerce  now  everywhere  felt,  is  the  fact  everywhere 
.existing  of  falling  prices,  caused  by  shrinkage  in  the  volume 
of  money."  They  also  declare  that  li  an  increasing  value  of 
money  and  falling  prices  have  been,  and  are  more  fruitful  of 
misery  than  war,  pestilence  and  famine." 

Silver  demonetization  was  thus  treated  by  the  Silver  com- 
mission : — "  The  effects  of  the  demonetization  so  far  ac- 
complished, and  of  the  resulting  disturbance  of  the  relative 
value  of  gold  and  silver  upon  trade,  commerce,  finance  and 
productive  interests, — in  this  country  and  throughout  the 
commercial  world, — have  been  signally  disastrous :  and 
especially  to  the  countries  that  have  recently  demonetized 
silver  ;  or  in  which  the  gold  standard  was  already  established. 
In  all  commercial  countries,  the  same  phenomena  are  sim- 
ultaneously presented — of  falling  prices  of  commodities  and 
real  estate  ;  diminishing  public  revenues ;  starving,  poorly 
paid  and  unemployed  laborers,  and  rapidly-multiplying 
bankruptcies.  These  facts,  existing  everywhere,  must 
arise  from  some  cause  operating  everywhere.  And  no  such 
cause  is  or  can  be  pointed  out,  except  the  decrease  of  the 
metallic  supplies  from  the  mines ;  and  consequently  the  de- 
crease of  metallic  money  relatively  to  population  and  com- 
merce since  about  1865  ;  and  the  larger  and  more  sudden 
decrease  of  metallic  money,  caused  by  partial  destruction  of 
the  money  functions  of  one  of  the  precious  metals.  This 
distress  dates  with  the  law  of  the  United  States  of  February 
12,  1873,  and  the  law  of  Germany  of  July,  1873, — giving 
practical  effect  to   a  previous  decree  of  that  empire  of  De- 


2io  OUR  MONEY  WARS. 

cember  4,  1S7 1,  for  the  establishment  of  a  single  gold 
standard." 

Senator  Jones  has,  since  then,  broadened  into  the  knowl- 
edge that  not  lack  of  silver  only,  but  of  money,  was  a  leading 
cause  of  the  woes  described.  The  report  concludes  thus  : 
Finally,  the  commission  believe  that  the  facts  that  Germany 
and  the  Scandinavian  States  have  adopted  the  single  gold 
standard,  and  that  some  other  European  nations  may  possi- 
bly adopt  it,  instead  of  being  reasons  for  perseverance  in  the 
attempt  to  establish  it  in  the  United  States,  are  precisely  the 
facts  which  make  such  an  attempt  entirely  impracticable  and 
ruinous.  If  the  nations  on  the  continent  of  Europe  had  the 
double  standard,  a  gold  standard  would  be  possible  here  : 
because,  in  that  condition  they  would  freely  exchange  gold  for 
silver.  It  was  that  condition  which  enabled  England  to 
resume  specie  payments  in  gold  in  182 1.  The  attainment  of 
such  a  standard  becomes  difficult  precisely  in  proportion  to 
the  number  and  importance  of  the  countries  engaged  in  striv- 
ing after  it ;  and  it  is  precisely  in  the  same  proportion  that  the 
ruinous  effects  of  striving  after  it  are  aggravated.  To  pro- 
pose to  this  country  a  contest  for  a  gold  standard  with  the 
European  nations  is  to  propose  to  it  a  disastrous  race. 

"  A  Mad,  Mad  World,  My  Masters  !  " — In  the  time  of 
our  greatest  financial  misery,  the  then  bold,  brave  Gen. 
Thomas  Ewing,  uttered  the  following  thrilling  words  in 
Congress.  Beaten,  humiliated  in  running  for  office,  and  im- 
poverished, he  afterward  came  to  hide  himself  in  New 
York, — trying  by  law  practice,  like  Conkling,  and  other  dis- 
appointed ex-leaders,  to  "  make  money".  He  spoke  thus  : — 
Mr.  Ewing  pointed  out  the  depreciation  of  values,  which  he 
estimated  at  one-third  of  the  whole.  The  Resumption 
law  was  a  practical  confiscation  of  $3,500,000,000  of  prop- 
erty. Three-fourths  of  all  classes  of  the  people  of  this 
country  were  debtors  ;  and  it  was  their  hard-earned  accumu- 
lations that  were  being  wrested  from  them,  by  this  robber- 
law.  The  loss  of  the  laboring  classes  was  $3,000,000  a  day, 
or  $900,000,000  a  year.  The  President  of  the  Dayton  and 
Southeastern  R.  R.  told  him  that  hundreds  of  men  had  been 
offering  to  work  on  the  road  for  bread  and  meat.  Nothing  for 
clothes :  nothing  for  wives  and  children  ;  nothing  to  lay  up 
for  winter  ;  merely  enough  to  keep  the  poor  human  body, 
that  was  doing  the  labor,  able  to  exercise  the  necessary  force. 


O  UK  MO  A  rE  Y  11  'A  RS.  2 1 1 

"  O  God,  that  bread  should  be  so  dear,  and  flesh  and 
blood  so  cheap."  [Sensation  and  applause.]  The  law  was 
not  going  to  stop  with  that  fall  in  values.  The  bottom  had 
not  been  touched.  A  further  fall  of  values  had  to  be  wit- 
nessed. An  increase  of  poverty  and  suffering,  the  practical 
confiscation  of  property,  and  the  repudiation  of  a  large  part 
of  the  public  debt.  He  appealed  to  the  moneyed  men.  Had 
they  not  heard  enough  to  warn  them  that  they  had  better 
stop  ?  What  was  the  meaning  of  the  labor  riots — that  al- 
most civil  war  six  months  ago  ?  The  meaning  was  that  labor 
had  been  trampled  on  as  much  as  it  could  stand. 

Goto  any  of  our  cities  and  seethe  hundreds  and  thousands 
and  tens  of  thousands  of  pale,  wan,  ragged  and  hungry  peo- 
ple. I  have  seen  them  clubbed  out  of  the  parks  of  New  York 
city  at  night;  men  who  went  there  hoping  to  lie  down  on  the 
grass  and  get  a  little  fresh  air,  and  a  cool  and  smooth  resting- 
place.  The  thing  has  been  pushed  just  as  far  as  it  will  bear. 
What  are  we  to  gain  by  inflicting  such  losses  on  our  industry 
and  labor  ?  What  is  the  great  advantage  to  be  accomplished  ? 
It  cost  this  country  in  the  loss  of  productive  industries,  in  the 
unjust  transfer  of  wealth  from  the  debtor  to  the  creditor,  in  the 
unjust  increase  of  taxation,  in  the  loss  of  labor,  more  than  all 
the  wastes  of  the  rebellion  combined.  We  are  to  get  back 
the  banking  system  that  existed  before  the  wrar,  modified  a 
little,  a  little  better  in  one  respect  than  the  old  State  bank 
system  ;  but  a  system  the  very  genius  of  which  will  be  panic  ■, 
a  system  which  in  the  very  nature  of  things  cannot  be  stable. 

No  greater  question  than  this  was  ever  presented  to  an 
American  Congress  for  its  action.  It  touches  the  happiness, 
the  prosperity,  the  future,  of  three-fourths  of  the  men,  women 
and  children  of  this  land.  Thousands  of  men  have  been 
driven  by  the  Resumption  law  to  insanity  or  suicide.  Hun- 
dreds of  thousands  have  been  cast  down  from  competency  to 
poverty.  Millions  have  been  deprived  of  employment  for 
their  labor,  on  which  rests  the  dependence  of  their  families. 
It  is  now  too  late  to  right  the  wrong;  but  we  may  avert  any 
greater  wrong  from  them  and  other  millions  by  prompt 
action  on  the  part  of  Congress  and  the  President.  I  do  not 
appeal  to  that  money-power  which  seeks  its  fortune  over  the 
wrecked  happiness  and  accumulations  of  its  fellow-men — a 
power  to  which  our  unhappy  civil  war  gave  birth  ;  which  has 
grown  so  enormous,  through  unjust  financial  legislation  ;  which 


2  12  OUR  MONEY  WARS. 

now  bestrides  us  like  a  colossus  ;  which  subsidizes  the  press; 
which  captures  statesmen  and  parties,  and  makes  them  its 
subservient  tools  ;  which  hounds  down  and  vilifies  every  pub- 
lic man  who  dares  to  raise  his  voice  against  it.  That  power, 
in  the  flush  and  arrogance  of  its  enormous  and  ill-gotten  gains, 
has  a  heart  of  stone — not  to  be  touched  by  any  human  sym- 
pathy and  compassion.  I  appeal  to  the  masses,  to  their  faith- 
ful representatives  (I  thank  God  !)  of  both  political  parties  on 
this  floor.  The  true  aim  of  government  is  the  greatest  good 
to  the  greatest  number  ;  and  whoever,  by  legislation  or  other- 
wise, changes  the  value  of  a  contract,  is  as  accursed  as  he 
who  removes  his  neighbor's  landmarks.  For  twelve  years 
past,  the  financial  legislation  of  this  country  has  been  dictated, 
one  would  think,  in  Lombard  Street  or  Wall  Street;  and  the 
people  have  been  plundered  by  every  fresh  enactment.  They 
have  suffered  the  fate  of  Gulliver  when  tied  down  by  the 
Lilliputians.  Thank  God  they  are  now  about  to  rise  ;  to  burst 
the  bonds  which  their  petty  foes  have  fastened  upon  them 
when  sleeping ;  and  to  walk  abroad  again  in  their  own  maj- 
esty.    [Applause.] 

Hon.  Francis  Gillette  of  Connecticut,  said  : — Most  of  my 
enterprising  neighbors  have  gone  down,  or  are  still  afloat  at 
the  cruel  mercy  of  capitalists  ;  who  hesitate  to  foreclose  upon 
them,  lest  they  should  fail  to  realize  enough  to  pay  first  mort- 
gages. Despondency  and  gloom  cloud  the  faces  of  our  lead- 
ing men  of  business  enterprise.  The  road  of  our  hard-money 
financiers  toward  "  a  gold  basis  and  specie  currency  "  is  a 
hard  road  to  travel.  Like  that  from  Jerusalem  down  to  Jeri- 
cho, they  find  it  rough  and  rocky,  and  infested  by  thieves  and 
usurers. 

The  Buell  Circular. — An  apparently  authentic  circular 
got  into  the  papers  which  was  dated  in  New  York,  September 
19,  1877,  and  was  signed  by  Jos.  Buell,  Secretary  of  the  Bank- 
ers Association.  It  calls  upon  bankers  to  make  every  effort 
to  sustain  all  papers  that  oppose  Greenbacks ;  and  to  with- 
hold all  patronage  from  Greenbackers  ;  as  "  they  wish  to  pro- 
vide the  people  with  money  other  than  our  own  supplying ; 
and  [if  successful]  would  seriously  affect  your  individual 
profits  as  banker  or  lender."  !  !  ! 

Stupid  Astonishment  of  the  Gold  Bugs. — An  editor 
said  in  1S75  :  "  There  is  no  comfort  in  the  reflection  that  we 
have  had  hard  times  in  this  country  before  and  survived  them. 


OUR  MONEY  WARS.  213 

The  debts  are  the  great  obstacle  at  present.  There  were 
hard  times  in  1840  and  1857,  and  at  other  times;  but  then 
there  was  little  or  no  debt  or  taxes.  There  were  no  railroad 
debts.  There  was  but  little  Government  debt  then.  There 
were  no  municipal  debts  then,  and  taxes  were  hardly  felt. 
It  is  not  so  now." 

The  following  from  the  Chicago  Tribune,  1S77,  is  a  fair 
Specimen  of  the  stupid  astonishment  displayed,  every  Spring 
and  Autumn,  by  the  bullion  papers,  all  through  the  hard 
times  ;  because  of  the  continuance  of  depression.  "  And 
still  Pharaoh  hardened  his  heart,  and  would  not  let  the  people 
go  :  "- 

The  continued  dullness,  is,  for  the  season,  unprecedented. 
Never  in  the  history  of  the  city,  probably,  have  the  most 
carefully-matured  opinions,  even  of  our  most  conservative 
men  [ah  !]  in  regard  to  the  Spring  business,  been  so  greatly 
at  fault.  Everybody  expected  a  fairly  active  trade  in  our 
leading  staples,  instead  of  the  dullness  so  long  continued 
that  it  has  become  decidedly  oppressive.  Last  year's  crop, 
in  most  sections,  was  a  fair  average  in  amount,  and  of  good 
quality.  Money  in  all  business  centers,  was  never  so  plenty 
and  so  cheap.  And  right  here  we  are  likely  to  find  the  cause 
of  the  stagnation  which  seems  to  have  fallen  upon  the  chan- 
nels of  trade.  Not  only  in  the  cities,  but  among  the  people 
in  all  the  surrounding  States,  money  has  been  and  still  is 
plenty.  Hence  they  have  sent  it  here  to  be  used  as  margins  ; 
and  the  vast  amount  of  farm  products  in  store  here  is  due 
more  to  the  nerve  and  the  money  of  country  dealers  than  to 
those  in  our  own  city.  Within  the  last  few  clays,  their  margins 
have  been  wiped  out  at  a  lively  rate  ;  and  how  long  they  will 
"  put  up  "  nobody  can  predict. 

New  enterprises  are  generally  avoided  ;  and  capitalists  are 
at  their  wit's  ends  to  find  some  profitable  employment  for  their 
funds.  Several  have  been  here  during  the  week.  Satisfactory 
loans  could  not  be  had.  Some  have  left,  while  others  are 
looking  for  real  estate,  generally  near  the  business  center  of 
the  city. 

Our  commercial  columns  show  that  transactions  on  the 
Board  of  Trade  are  mainly  in  options.  Those  in  grain  for 
shipment  are  merely  nominal.  The  cattle-yards  furnish 
nearly  all  the  Eastern  exchange  upon  the  market. 

What  Gentleman  George  Said, — George  H,  Pendleton 


2I4  OUR  MONEY  WARS. 

of  Ohio  tersely  assailed  the  Republican  party  in  1877.  After 
denouncing  the  National  banks,  because  they  are  liable  to 
become  "a  great  political  machine,  the  ally  and  support 
and  money-lender  and  master  of  the  party  which  sustains 
it  " — he  arraigns  the  Republican  party  for  the  financial 
measures,  adopted  during  and  after  the  war.  He  says  they 
"unnecessarily  [?]  abandoned  specie  payments  [?]  and  most 
unwisely  degraded  the  Greenback  currency.    They  enhanced 

THE  BURDEN  OF  THE  PUBLIC  INDEBTEDNESS  BY  MAKING  A 
HOME  DEBT  A  FOREIGN  DEBT  ;  BY  MAKING  A  PAPER  DEBT  A 
COIN    DEBT;     BY    EXTENDING    THE    TIME    OF  ITS    PAYMENT;   BY 

making  a  coin  debt  A  gold  debt:  by  contracting  and 
hoarding,  and  selling  bonds.  And  all  this  they  did  without 
other  apparent  reason  than  the  demands  and  the  profit  of 
the  holders  of  bonds." 

The  "  Leading  Papers." — The  following  item,  current 
during  the  hard  times,  is,  as  Horace  Greeley  would  say,  "  very 
interesting  reading."  It  will  be  interesting  to  the  Western 
people,  generally,  who, — as  far  as  I  can  judge  from  consider- 
able experience  during  the  last  four  seasons,  in  Ohio,  Indiana, 
and  a  part  of  Illinois, — believe  in  the  nation  having  the  profits 
of  the  paper  circulation,  to  be  informed  that  the  six  or  seven 
daily  journals  of  most  influence  in  New  York,  about  two  years 
ago,  entered  into  an  explicit  understanding  to  advocate  an  ex- 
tinction of  the  legal  tender  circulation.  These  journals  were 
all  in  favor  of  it,  until  the  decease  of  the  founders  of  the  three 
chief  morning  papers — the  Herald,  7 hues  and  Tribune.  These, 
and  all  the  others,  are  now  controlled  by  new  men,  and  capital- 
ists who  have  large  interests  in  National  banks,  and  derive 
a  vast  annual  income  from  advertisements  from  this  source. 


The  N.  Y.  Tribune  held  high  carnival  in  1S77.  The 
N.  Y.  Sun,  before  it  became  a  Greenback  paper  (for  a 
time)  said  :  "  No  wonder  the  inflationists  make  capital  of 
the  fact  that  the  Tribune,  the  pretended  champion  of  hard 
money  for  the  good  of  all,  is  only  the  tool  of  Jay  Gould  ; 
and  works  in  his  stock-jobbing  interest.  Jay  Gould  and  his 
stool-pigeon  are  a  load  the  advocates  of  a  sound  currency 
cannot  afford  to  carry.  The  former  work  for  their  personal 
greed,  the  latter  for  a  great  principle.  We  repudiate  the 
stool-pigeon  and  his  master  !  " 


OUR  MONEY  WARS.  215 

Mark  how  the  cold-blooded  wretches  who  run  the  Tribune 
jeered  at  "  the  hungry  and  homeless  wanderers,"  who,  as 
they  well  knew,  filled  the  highways  of  this  land  in  1877  : — 
"  Mr.  Ewing's  speech  in  favor  of  repealing  the  Resumption 
Act  was  a  fine  example  of  emotional  treatment  applied  to 
financial  questions.  And  if  such  questions  were  best  settled 
by  a  show  of  hands,  at  an  Ohio  town-meeting,  nothing  could 
be  more  effective,  before  such  a  tribunal,  than  Mr.  Ewing's 
effort.  Mr.  Ewing's  vivid  pictures  of .  despoiled  labor  and 
hungry  and  homeless  wanderers, — and  the  general  intensity 
of  his  rhetoric, — would  be  well  calculated  to  ruffle  up  the 
spirits  of  the  unthinking  ;  and  incite  a  mutiny  against  some 
imaginary  oppressor ;  even  if  he  should  not  condescend  to 
any  appearance  of  an  argument,  or  if,  as  was  really  the  case 
in  this  instance,  his  entire  argument,  so  called,  was  bottomed 
on  the  hollow  fallacy  that  a  promise  to  pay  is  money." 

No  wonder  that  Ewing,  like  so  many  others,  grew  selfish  : 
and  concluded  to  come  to  New  York  and  "  make  money." 

Here  was  a  characteristic  piece  of  impudence  in  a 
Tribune  editorial.  The  editor  began  thus  :  "  Even  in  the 
worst  cause,  unflinching  courage  commands  admiration.  The 
soft-money  lunatics  merit  contempt  by  the  amazing  folly  of 
their  belief.  But  they  are  so  thoroughly  in  earnest ;  they 
have  so  fully  the  courage  of  their  opinions ;  they  are  so  per- 
sistent, resolute,  and  ready  to  face  all  possible  consequences, 
partisan  or  personal,  in  fighting  for  their  notions, — that  it 
would  be  a  great  mistake  to  despise  them.  Men  of  that 
stamp  generally  make  themselves  felt.  *  *  *  Of  men  who 
thoroughly  believe  in  the  soft  money  heresy,  avow  that  belief 
on  all  occasions  without  hesitation  ;  and  in  any  sharp  con- 
test on  that  issue  are  impelled  by  that  belief,  there  are 
many  hundred  thousand. 

"  They  band  together  as  naturally  as  the  devotees  of  Slavery 
did  in  years  before  the  war." 

That  last  touch  is  good  !  If  he  had  put  in  the  "  Anti  " 
it  would  have  been  right. 


In  that  same  terrible  1S77,  the  Tribune  amused  itself  thus  : 
"  No  cautious  gentleman  can  retire  to  rest  with  any  comfort 
now-a-days,  without  going  through  a  rigid  course  of  self- 
examination,  to  convince  himself  that  he  has  not  been  steal- 
ing something,  or  committing  a  forgery  or  so,  during  the  day. 


2l6  OUR  MONEY  WARS. 

As  a  prophylactic  measure, — duringthis  epidemic  of  financial 
inpropriety, — it  would  be  well  for  any  operator  who  is  com- 
pelled to  expose  himself,  to  hire  a  private  detective  to  watch 
him — at  least  during  business  hours." 

I  wrote  at  the  time  :  "  As  true  as  it  is  funny  and  sad  ! 
Try  it  yourself,  Jay  !  " 

Again  that  paper  said  : — Time  was  when  exposure  of  such 
frauds  as  those  of  Morton  in  Philadelphia,  and  Oilman  in 
New  York,  would  have  shaken  the  commercial  fabric  to  its 
very  foundations. 

It  is  not  altogether  a  favorable  symptom,  that  these  dis- 
closures create  so  little  alarm.  For  it  proves  that  commercial 
confidence  has  sunk  so  far,  that  scarcely  any  dishonesty  in 
men  of  the  highest  standing,  and  scarcely  any  carelessness 
on  the  part  of  those  who  manage  the  funds  of  others,  can 
depress  it  much  further. 


The  Norristown,  Pa.,  Herald said  :  "  To  save  composition, 
every  well-regulated  newspaper  office  should  keep  the  fol- 
lowing form  in  type  :  The savings  bank  of sus- 
pended yesterday  morning.     The  president  Mr. ,  who 

is  a  defaulter  to  a  large  amount,  has  disappeared,    and  it  is 
believed  that  he  has  sailed  for  Europe." 

These  "  conservative "  papers  were  largely  responsible 
for  all  this  villainy. 

No  More  Trade  Dollars. — October.  15,  1877,  John 
Sherman  ordered  the  Philadelphia  Mint  to  stop  coining  trade 
dollars.  Silver  had  so  depreciated  that  speculators  were 
making  money,  shoving  them  on  the  people. 

Our  Per-Capita  Ourrency. — The  following  table,  com- 
piled from  official  sources,  by  B.  S.  Heath,  shows,  the  amount 
of  our  circulation  per  capita;  and  its  contraction  from  1865 
to  1877  : 

Year.  Currency. 

1865  $1,651,282,373 

1866  1,803,702,726 
J867  1,330,414,677 
1868  817,199,773 
1S69       750,025,989 

1870  740,039,179 

1871  734,244,774 
1873       736,349,913 


Population. 

Per  Cap. 

34,8i9,53l 
35,537^48 
36,269,502 

47.42 
50.76 
36.68 

37,016,949 

22.08 

37,779,800 

38,558,37! 

19.85 
17.19 

39>75°.°73 
40,978,607 

18.47 
17.97 

O  UR  MONE  Y  WA  RS.  2  1 7 

Year.  Currency.  Population.         Per  Cap. 

1873  738,291,749  42,245,110  17.48 

1874  779-°3I>589  43,55°>756  !7-84 

1875  778,176,250  44,890,705  17.33 

1876  735-358-832  46,284,344  15.89 

1877  696,443,394  47,714,829  14.60 

N.  A.  Dunning,  in  "The  Philosophy  of  Price,"  gives  a 
similar  table,  with  the  amount  of  currency  decreased  by 
from  30  million  in  1S68  to  90  million  in  1877,  through  some 
discrepancy  in  their  calculations.     Dunning  continues  thus  : 

Year.  Currency.  Population.         Per  Cap. 

187S  $549,540,187  48,935,306  11.23 

1879  534,424,248  5°^55^3  IO-6S 

1880  528,524,267  51,660,456  10.23 

1881  610,632,433  53,210,269  n.48 

1882  657,404,084  54,806,577  n.97 

1883  648,205,895  56,450,714  11.48 

i884  59I>476?978  58-I44-235  10.17 

1885  533,405,001         59,888,562  8.90 

Debts  in  the  United  States. — The  Act  of  Feb  12, 
1873,  took  from  silver  its  "  lawful  money  "  quality  in  sums 
above  $5,  and  the  law  of  May,  1876,  totally  demonetized 
the  trade  dollar, — leaving  nothing  but  gold  with  which  to 
pay  debts,  taxes,  interest,  and  for  the  redemption  of  bank 
bills.  The  following  figures  do  ivTJt  overreach  the  actual 
amount  of  the  individual,  municipal,  corporate  and  national 
indebtedness  of  the  country  in  1877  : 

Greenbacks  to  the  amount  of $350,000,000 

National  bank  currency 300,000,000 

Notes  payable  in  bank 900,000,000 

National  bank  deposits 1,000,000,000 

Savings  bank  deposits 1,500,000,000 

Mortgages,  not  less  than 3,000,000,000 

Railroad    bonds 5,000,000,000 

Public     debt 1,700,000,000 

Private  indebtedness 200,000,000 

Municipal  bonds 375,000,000 


$14,325,000,000 
It  is    no    wonder    that,    with    statements    like  this    before 
them,  our  people  hustled  to  get  silver  remonetized. 


218  OUR  MONEY  WARS. 

The  English  View  our  Amazing  Folly. — After  review- 
ing the  state  of  trade  in  Great  Britain  and  Germany,  the 
London  Telegraph  says,  with  reference  to  the  United  States  : 
— In  1876  thirty  American  railways,  covering  3,846  miles  in 
length,  and  representing  $217,848,000  of  invested  capital, 
were  sold  under  foreclosure  of  mortgages.  Receivers  in  bank- 
rupty  were  appointed  or  foreclosures  determined  upon  in  the 
case  of  46  other  lines,  extending  over  7,576  miles  and  in- 
volving total  expenditure  in  construction  and  maintenance  of 
$536,000,000.  Ten  railway  companies  figure  in  the  list  of 
defaulters  for  the  same  year,  whose  aggregate  lines  measure 
2,757  miles,  and  show  $156,661,000  to  have  been  invested 
in  them.  This  making  a  total  of  86  railways,  consisting  of 
14,179  mileage,  and  exhibiting  a  loss  to  the  shareholders  of 
$912,509,000.  The  list,  therefore,  as  far  as  it  has  been  made 
up,  discloses  the  painful  fact  that,  during  the  past  year,  one- 
fifth  of  the  entire  railway  mileage  of  the  United  States, — 
representing  a  similar  proportion  of  the  total  railway  capital 
of  the  country, — was  brought,  from  various  causes,  into  a 
state  of  insolvency.  But  this  melancholy  revelation  naturally 
awakens  our  curiosity  to  learn  how  far  the  business  classes 
proper  shared  in  the  general  financial  visitation. 

Out  of  630,099  firms  in  the  Union  reported  to  be  engaged 
in  business  in  1876,  no  fewer  than  9.002  became  bankrupt: 
and  the  gross  amount  of  their  liabilities  reached  the  sum  of 
$191,117,786.  The  increase  in  the  number  of  failures  com- 
pared with  1875  was  1,350;  while  the  latter  year  showed 
the  number  to  be  2,000  more  than  in  1874.  The  total  indebt- 
edness of  insolvents  in  1876,  however,  notwithstanding  the 
augmented  number  of  failures,  was  less  than  in  1S75,  by 
nearly  $10,000,000.  But  the  description  of  firms  which  col- 
lapsed last  year,  combined  with  the  reduced  average  liabili- 
ties chargeable  upon  the  previous  year,  plainly  indicates  that 
the  wave  of  financial  embarrassment  is  not  yet  spent ;  and 
that,  after  engulfing  the  mammoth  houses,  it  has  been  grad- 
ually swallowing  up  the  smaller  traders.  It  is,  moreover, 
significant  of  the  manner  in  which  business  has  been  con- 
ducted in  the  several  divisions  of  the  Union,  that  the  failures 
in  the  Middle  States  are  one  in  every  57  trading  firms,  and  in 
the  Western  States  one  in  every  72.  In  the  Eastern  States, 
notwithstanding  their  reputation  for  wealth  and  stability, 
one  in  every  59  firms  has  succumbed  ;  while  in  the  Southern 


OUR  MONEY  WARS.  219 

States  which  have  been  depopulated  and  exhausted  by  the 
civil  war,  and  are  still  laboring  under  heavy  political  disabil- 
ities, the  percentage  of  failure  is  one  in  every  64. 

1878. 

A  Year  of  National  Shame. — Under  this  head  the  N. 
Y.  Herald,  descanted  as  follows  early  in  1S78  : — The  year 
that  has  just  closed  is  altogether  the  most  disgraceful  in 
American  annals  ;  if  disgrace  is  to  be  measured  by  the  ex- 
posure rather  than  by  the  perpetration  of  stupendous  breaches 
of  trust.  If  the  year  1877  has  any  competitor  for  this  bad 
pre-eminence  it  is  the  year  187 1,  when  the  monstrous  rob- 
beries of  the  Tweed  Ring  were  dragged  forth  into  publicity  ; 
and  the  rascalities  of  the  infamous  Credit  Mobilier  were 
fastened  by  proofs  upon  their  authors  and  accomplices. — 
'But  in  those  instances  the  villainy  was  not  so  widely  diffused. 
There  was  one  great  focus  of  corruption  at  Washington  ;  but 
the  taint  and  rottenness  had  not  spread  into  every  walk  of 
business,  and  every  kind  of  private  and  semi-public  transac- 
tion. But  at  present,  the  whole  atmosphere  seems  reeking 
with  foulness.  .  Every  description  of  fraud  and  embezzle- 
ment is  repeated,  in  every  part  of  the  country ;  until  their 
accumulated  magnitude  seems  like  Belion  piled  upon  Ossa, 
in  the  ancient  fiction.  It  is  difficult  to  say  whether  frauds 
have  attained  a  ranker  growth  here  in  New  York,  or  in  Phil- 
adelphia, or  in  Boston,  or  in  Chicago,  or  in  San  Francisco, 
or  in  some  of  the  smaller  towns.  In  proportion  to  popula- 
tion and  opportunities  there  would  seem  to  be  but  little  dif- 
ference.-5—There  is  no  conceivable  variety  of  swindling  which 
has  not  been  practiced  ;  but  the  most  execrable  of  all  is  the 
widespread  violation  of  sacred  trusts,  by  institutions  and  men 
charged  with  the  care  of  property  belonging  to  the  unpro- 
tected and  the  helpless.  There  are  degrees  in  the  turpitude 
of  theft ;  and  none  is  so  base  as  that  which  takes  the  bread 
from  the  mouth  of  the  widow  and  the  orphan,  as  so  many 
false  guardians  and  rotten  savings-banks  and  life  insurance 
companies  have  done. 

The  Partial  "Uprising  of  a  Great  People." — 1877  was 
the  hopelessly  horrible  year.  Light  began  to  dawn  in  the 
Spring  of  1878.  The  trodden  worm  began  to  turn,  to  some 
purpose.  Then  began  "  the  uprising  of  a  great  people." 
The  agony  was  as  great  as  ever,  and  the  misery  more  appall- 


220  OUR  MONEY  WARS. 

ing.  800,000  of  our  Eastern  middle-class,  in  despair  cf  any 
improvement,  realized  what  they  could  on  their  small  stores, 
factories,  shops  and  farms ;  and  fled  west  of  the  Mis- 
sissippi,— knowing  that  if  they  delayed  longer  they  would 
soon  be  going  a-foot.  The  "  pound-of-flesh  "  men  were 
frightened  ;  and  yielded  a  few  points,  such  as  the  Congress 
resolution  of  January  20,  1878,  asserting  the  right  to  pay 
bonds  in  silver,  the  Bland  Act  of  February  28,  i878,remonetiz- 
ing  silver,  the  Act  of  March  31,  1878,  reissuing  44  million 
of  Greenbacks  ;  and  the  decree  of  John  Sherman  in  October, 
1878,  remonetizing  the  Greenback  by  making  it  receivable 
for  custom  duties.  These  made  some  prosperity  possible. 
Of  the  people  who  fled  West,  say  a  quarter  made  a  new 
start  by  living  in  dug-outs  on  the  prairies  ;  a  quarter  perished 
from  disease  and  privation  and  heart-break ;  a  quarter  took 
wage  service  ;  and  a  quarter  wandered  back  East  to  finish 
their  lives  in  various  servitudes. 

Bonds  Not  Payable  in  Gold. — The  following  resolution 
was  adopted  by  the  Senate  January  25,  1878,  and  by  the 
House  January  28,  1878  :  the  vote  being  in  the  Senate  42  to 
20,  and  in  the  House  189  to  79  : — "That  all  bonds  of  the 
United  States  issued  or  authorized  to  be  issued  under  the 
said  acts  of  Congress  hereinbefore  recited  are  payable,  prin- 
cipal and  interest,  at  the  option  of  the  Government  of  the 
United  States,  in  silver  dollars  of  the  coinage  of  the  United 
States,  containing  412^  grains  each  of  standard  silver  ;  and 
that  to  restore  to  its  coinage  such  silver  coins  as  a  legal 
tender  in  payment  of  said  bonds,  principal  and  interest,  is 
not  in  violation  of  the  public  faith,  nor  in  derogation  of  the 
rights  of  the  public  creditor." 

The  acts  referred  to  are  the  Funding  Act  of  1870,  authoriz- 
ing the  issue  of  4's  and  4/^'s  for  refunding  purposes  ;  and  the 
Resumption  Act  of  1875,  authorizing  the  further  issue  of  the 
same  bonds  for  resumption  purposes.  The  resolution  was  a 
public  notice  to  the  whole  world,  that  the  nation  would  pay 
its  debt  in  silver,  if  it  should  so  elect.  With  the  exception 
of  $200,000,000  of  4^2 's  and  $75,000,000  of  4's  every  United 
States  bond  outstanding  in  1886,  was  issued  subsequent  to 
the  passage  of  this  resolution,  and  was  subject  to  its  declara- 
tion. Of  the  excepted  bonds,  the  $200,000,000  of  4^2 's 
became  due  in  1891. 

In  spite  of  the  above  facts  Chas   E.  Coon,  late  Asst  Sec. 


OUR  MONEY  WARS.  221 

of  the  Treasury,  was  urging  in  the  Herald  in  1S86,  that  "  we 
have  agreed  to  redeem  these  bonds  in  gold  coin. "  Coon  is 
one  of  those  coons  who  start  a  still  hunt  for  a  fat  Wall  Street 
berth,  as  soon  as  they  get  into  office  in  Washington.  His  Wall 
St.  concern — Bateman,  and  Co.,  came  to  grief  in  1890  :  also 
a  concern  in  Buffalo  in  which  he  was  silent  partner. 

The  Bland  Bill  Passed  over  Hayes's  Veto. — The  Act 
of  February  28,  1878,  monetized  the  silver  dollar  over  the 
veto  of  the  President.  Silver  dollars  of  412^  grains  9-10 
fine,  are  made  full  legal-tender  for  everything,  unless  specially 
provided  to  be  paid  in  something  else.  These  dollars  are 
to  be  coined  by  and  for  the  Government ;  not  more  than 
$4,000,000  per  month,  nor  less  than  $2,000,000.  The  holders 
of  these  dollars  can  deposit  them  in  the  Treasury,  and  receive 
certificates  therefor,  which  certificates  are  to  be  full  legal- 
tender  for  everything.  This  is  the  celebrated  "  Bland  Bill  ", 
that  has  caused  the  silver  dollar  to  be  called  the  Bland 
dollar,  the  Bland  cart-wheel,  etc. 


Senator  Teller  said  in  his  speech  of  May  14,  1890  : — During 
the  ten  years  preceding  December  31,  1877,  we  produced  in 
the  United  States  not  less  than  $425,000,000  of  gold  ;  and  of 
silver  not  less  than  $270,000,000  ;  or  a  total  of  gold  and  silver 
of  $695,000,000.  Yet,  in  the  month  of  February,  1878,  when 
the  Bland  bill  became  a  law,  our  total  amount  of  gold  and 
silver,  exclusive  of  subsidiary  coin,  was  less  than  $180,000,000, 
of  which  $167,500,000,  was  gold.  During  the  ten  years 
named,  we  had  exported  $335,000,000  more  gold  than  we 
had  imported ;  and  $185,000,000  more  silver  than  we  had 
imported  ;  making  $520,000,000  of  gold  and  silver  in  excess 
of  imports.  During  the  ten  years  succeeding  the  passage 
of  the  Bland  bill,  we  imported  $198,634,763  of  gold  in  excess 
of  our  exports ;  and  we  kept  at  home  our  own  production, 
amounting  to  more  than  $420,000,000.  So  that,  in  ten  years, 
we  added  to  our  stock  of  gold  more  than  $600,000,000,  less 
what  might  have  been  used  in  the  arts  ;  and  our  stock  of  gold 
is  now  estimated  by  the  Treasury  Department  to  be  $684,- 
000,000.  We  have  now  of  gold  and  silver  $1,038,000,000. 
Surely  the  coinage  of  silver  did  not  drive  gold  out  of  the 
country ;  nor  did  it  keep  it  out. 


February   22,    1878.  the    Greenback  Labor  Party,    meet- 


222 


OUR  MONEY  WARS. 


ing  in  convention  at  Toledo,  Ohio,  formulated  an  elaborate 
platform  ;  the  money  planks  of  which  have  been  much  used 
by  money  reformers  since  then. 


March  31,  1878,  Congress  authorized  the  reissue  of  the 
44  millions  of  Greenbacks  that  had  been  destroyed. 

Discussion  was  hot  and  heavy  in  1878  as  to  whether  the 
U.  S.  currency  was  near  two  billions  in  1865.  The  Inter-Ocean, 
that  now  stoutly  denies  it,  in  1878  printed  the  following 
editorial  reference  to  this  subject  : — 

The  anti-Greenback  papers  of  this  city  are  in  the  habit  of 
stating,  every  now  and  then,  that  the  volume  of  currency  has 
been  but  slightly  decreased,  and  that  the  amount  per  capita 
in  1S65  and  1878  varied  very  little,  being  from  $14  to  $15. 
We  produce  below  a  table  compiled  from  official  sources : 


Year. 


1865 
1866 
1872 
1877 


Paper  Money 


$1,651,282,373 

1,803,702,726 

735>358>832 

696>443>394 


Population 


34,819,581 
35>537,i48 
46,284,344 
47,714,829 


Per  Capita 


$47  42 
50  76 

1589 
14  60 


The  currency  included  in  the  above  amounts  comprises 
demand  and  one  and  two  year  Treasury  notes  authorized  by 
the  Acts  of  December  27,  1857,  December  17,  i860,  and 
March  2,  1861  ;  temporary  ten-day  loans  and  one  year  certifi- 
cates of  indebtedness ;  Treasury  notes  payable  in  two  years 
and  in  sixty  days  ;  7-30  three-year  notes;  compound  interest 
notes ;  three  per  cent,  certificates  ;  non-interest  bearing 
demand  and  legal-tender  notes;  fractional  currency;  State 
bank  notes  and  National  bank  notes. 

The  bulk  of  these  issues  were  made  legal  tender  by  the 
Government. 

We  are  prepared  to  prove  that  all  the  above  issues  were 
employed  as  currency,  and  went  to  make  up  the  volume  of 
circulating  medium. 

It  is  in  our  opinion  the  highest  of  folly  for  the  opponents  of 
the  so-called  National  party  to  deny  facts  so  well  established 
as  is  that  of  the  contraction  of  the   currency.     If  that  party 


OUR  MONEY  WARS.  223 

cannot  be  defeated  by  a  fair  and  honest  statement  of  the 
truth,  then  it  had  better  be  allowed  to  win. 

Ernest  Seyd  on  Silver  Demonetization. — On  May  18, 
1878,  Judge  W.  D.  Kelley  referred  in  the  House  to  a  previous 
speech  of  his  which  was  :  "  I  avail  myself  of  the  two  minutes 
allowed  me  to  reply  to  the  gentleman  from  Maine,  Mr.  Frye, 
and  the  gentleman  from  New  York,  Mr.  Hewitt,  and  to  tell 
them  why  prices  have  fallen  in  every  country,  wiry  machinery 
is  idle  and  the  laboring  people  of  all  countries  in  poverty, 
and  unable  to  consume  each  other's  productions,  or  to  con- 
tribute to  the  revenues  of  their  Government.  Prices,  sir, 
the  world  over,  had  adjusted  themselves  to  the  volume  of 
gold,  silver  and  paper  money  in  circulation  •  and  when  Ger- 
many and  the  United  States  thrust  silver,  which  was  about 
one-half  of  the  metallic  money  of  the  world,  out  of  the  cate- 
gory of  the  money  metals  ;  when  Germany  prohibited  the  cir- 
culation of  any  bank-note  under  $25.00  ;  when  the  United 
States  contracted  its  paper  money  from  two  thousand  millions 
to  practically  less  than  five  hundred  millions, — they  decreed 
the  terrible  shrinking  of  prices,  and  consequent  ruin,  which 
have  taken  place  throughout  America  and  Europe,  and  thus 
deprived  the  laboring  people  of  the  world  of  employment, 
and  of  the  ability  to  earn  the  means  to  contribute  to  the 
public  revenue." 

He  then  said  that  the  contractionists  and  monometalists 
sitting  near  had  told  him  that  this  two-minute  speech  was 
"  the  best  joke  of  his  life."  To  intensify  this  joke,  he  would 
now  present  to  them  a  paper  read  April  5,  1878,  before  the 
British  Society  of  Arts  by  Ernest  Seyd,  F.R.S.,  one  of  the 
most  distinguished  statisticians  in  the  world.  It  related  to 
the  stagnation  of  business  in  England.  Mr.  Kelley  said  that 
though  Mr.  Seyd  did  not  consider  the  effect  of  the  con- 
traction of  paper  money  in  America  and  Germany,  it  was 
evident  that  "all  the  evils  accruing  from  silver  demonetiza- 
tion were  immensely  enhanced  by  our  withdrawal  of  more 
than  a  thousand  million  dollars  of  paper  money." 

Mr.  Seyd,  after  a  full  exposition  of  the  wealth  and  finan- 
cial affairs  of  England,  showed  that  in  1873,  our  panic  year, 
which  followed  three  years  of  wonderful  success  in  England, 
the  balance  of  trade  turned  against  her.  In  1875,  6  arid  7, 
it  rose  successively  to  ^4,000,000,  ^34,000,000  and  ,£57,- 
000,000   against   her.     He  says,  truly  enough,   that   in  1S73, 


224  0UR  MONEY  WARS. 

Central  and  South  American  States  began  to  default  on  their 
bonds.  This  reached,  in  1875,  $50,000,000.  In  1876,  Peru 
and  Uruguay  bankrupted,  with  a  loss  of  $150,000,000  to 
England ;  and  Turkey  with  a  loss  of  $400,000,000 ! !  The 
strangest  omission  in  Mr.  Seyd's  estimates  is  that  of  the  de- 
fault on  the  interest  on  $500,000,000  of  American  railway 
and  other  securities  in  our  panic  years.  This  certainly  had 
much  to  do  with  England's  depression.  Perhaps,  he  did  not 
enumerate  this  because  he  considered  that  only  the  interest 
was  permanently  in  default.  He  was  about  right*  as  most 
of  them  had  recovered  by  1882  ;  though  the  stockholders  of 
most  of  the  companies  held  in  the  grip  of  these  bonds,  had 
been  ruined.  The  latter-day  bond  has  a  tighter  hold  than 
the  ancient  ones ;  especially  when  the  strongest  nations  are 
ready  to  re-rivet  them  by  aid  of  army  and  navy,  as  the  Egyp- 
tians have  discovered  of  late.  Ah,  where  are  the  angels  to 
enter  the  prison-house  and  cast  off  these  bonds,  as  they  did 
for  Apostle  Peter  ? 

Fourteen  Dollars  Per  Capita. — The  circulation  out- 
standing June  18,  1878,  is  shown  as  follows,  by  Secretary 
McCulloch's  report  : 

State  Bank  circulation    • 426,504 

National  "         "  324,514,284 

Demand   Notes 62,297 

Legal-Tender  " 346,681,016 

One  and   Two  Years  Notes  of  1863 ...  .  90,485 

Compound  Interest                    "            ....  274,920 

Fractional  Currency 16,547,768 


_   $688,597,274 

The  same  statement  estimates  the  population  of  the  United 
States  at  47,483,000  or  48  million  in  round  numbers. 

This  gives  a  per  capita  circulation  of  $14,  or  $30  less  than 
in  1864,  1865. 

A  Million  and  a  Half  Greenback  Vote. — The  most 
remarkable  occurrence  in  1878  was  the  extraordinary  growth 
of  the  Greenback-Labor  party ;  which  in  November  polled 
a  million  four  hundred  thousand  votes ;  and  elected  20  Con- 
gressmen ;  about  15  of  whom  remained  faithful  to  the  party. 

One  of  the  prominent  features  of  this  movement  was  what 
was  called  "Peter  Cooper's  Advocate" ;  though  the  paper 
was  only  under  the  auspices  of  Cooper.     It  attained  a  cir- 


OUR  MONEY  WARS.  225 

culation  of  700,000  real  subscribers  ;  and  sent  out  30  tons  of 
paper  weekly.  The  writer  of  this,  Samuel  Leavitt,  was 
managing  editor  during  the  six  months,  March  to  Septem- 
ber, when  it  was  "booming".  It  afterward  went  down, 
through  mismanagement  of  the  proprietor,  Walter  Shupe,  as 
rapidly  as  it  rose.  I  gave  a  column  and  a  half  to  the  N.  Y. 
Sun  about  the  paper  when  I  left  it  in  September.  Here  is 
what  the  N.  Y.  Times  said  of  it : — 

In  short,  the  Greenback  organization  in  the  South,  as  in 
other  parts  of  the  country,  is,  in  different  localities,  made  up 
of  different  material.  In  North  Carolina,  the  men  engaged 
in  the  new  movement  are  for  the  most  part,  white  mechanics, 
and  small  white  farmers  who  are  in  debt— men  who  have 
nothing  to  lose  by  inflation,  repudiation  and  communism  ; 
and  who  believe  that  they  can  gain  nothing  by  the  success  of 
either  of  the  old  parties.  There  can  be  no  doubt  that  the 
people  of  the  mountains  and  the  small  farmers  referred  to 
have  to  a  great  extent  been  won  over  to  the  new  party  by  the 
teachings  of  the  Advocate ;  which,  at  Peter  Cooper's  expense 
it  is  claimed,  has  been  sent  into  the  remote  inland  counties 
by  the  car-load.  At  all  events  they  are  in  it  ;  and  the  Dem- 
ocrats are  evidently  very  much  afraid  that  they  will  remain 
firm  in  their  determination  to  vote  for  its  candidates. 

The  Greenback  Remonetized.— Much  has  been  said  of 
the  quiet,  secretive  way  in  which  Sherman  &  Co.  demonetized 
silver  in  1873.  On  October  1,  1878,  in  consequence  of  the 
Greenback  uproar,  voiced  specially  by  Peter  Cooper's  Advo- 
cate, he,  as  boss  of  the  Republican  and  ruling  party,  caused 
a  change  of  even  greater  importance,  in  that  sly,  sleek,  quiet, 
unobtrusive  way  of  his.  He,  on  that  day,  as  autocrat  of  his 
party,  ordered  the  Greenbacks  to  be  taken  for  duties 
at  the  Custom  House.  In  this  act,  sneakingly  done,  the 
Republican  party  completely  changed  front,  financially;  and 
made  the  specie  resumption  of  January  1,  1879,  a  Greenback 
remonetization.  The  Democratic  leaders  were  too  ignorant 
of  finance  to  see  the  change  of  the  Republican  Party's  policy, 
from  a  specie  resumption  to  a  Greenback  remonetization. 
The  National  banks  had  accomplished  this  result,  to  save 
them  from  bankruptcy,  and  to  extend  their  charters  for  20 
years  longer.  The  Republican  leaders  claimed  that  it  was  a 
resumption  of  specie  payments.  //  was  simply  a  change  of 
the  common  Greenback  into  a  legal  tender  Demand  note, 
*5 


226  OUR  MONEY  WARS. 

which  was  always  receivable  for  duties.  The  Republican 
leaders  soon  discovered  that  the  Greenbacks  became  better 
than  coin  ;  after  they  were  received  for  duties.  They  secretly 
resolved  to  support  the  Greenback  system,  in  order  to  pre- 
serve the  National  banks,  to  restore  trade  and  save  the  party. 
These  results  were  obtained.  The  slow-brained  Democrats 
were  cajoled  by  Belmont,  Hewitt,  Tilden  &  Co.  into  rank 
gold-buggery. 

Chicago  Tribune  on  the  Fraud  of  1873. — There  has 
been  much  discussion  about  the  fraud  by  which  silver  was 
secretly  demonetized  here  in  1873.  The  Chicago  Tribune 
threw  some  light  on  it  in  1878.  It  said  that  the  bill  was  con- 
cocted by  "  an  English  gentleman,"  Mr.  Boutwell  the  Comp- 
troller of  the  Currency,  and  two  or  three  other  American  cap- 
italists. The  work  of  stealing  it  through  Congress  was  in- 
trusted to  Mr.  Hooper  of  Massachusetts,  in  the  House,  "  who 
is  a  capitalist  and  money-lender  ;  "  and  to  John  Sherman  in 
the  Senate.  It  was  not  permitted  to  be  read  in  the  House ; 
and  Mr.  Hooper  deliberately  lied,  in  debate  upon  it,  in  re- 
sponse to  the  inquiry  of  members  regarding  its  features  ;  and 
Speaker  Blaine,  by  extraordinary  ruling,  helped  to  force  it 
through  the  House — only  123  members  being  present.  Mr. 
Blaine  undoubtedly  was  in  the  secret  of  the  whole  scheme 
himself.     His  unheard-of  ruling  warrants  this  belief. 


There  was  much  hot  fighting  all  over  the  country  at  this 
time,  as  to  whether  the  currency  had  been  reduced,  the  gold- 
bugs  insisting  that  it  had  not  been.  Such  leading  papers  as 
Chicago  lnter-O.  can, Cincinnati  Enquirer and  St.  Louis  Repub- 
lican talked  as  the  Inter- Ocean  does  in  the  following  sentence. 
After  claiming  that  we  had  about  1,804  millions  of  currency 
in  1866  [see  that  year]  it  adds  :  "  We  are  prepared  to  prove 
that  all  the  above  issues  were  employed  as  currency." 

The  Leading  Paper  Caught  Napping.  The  N.  Y. 
Tribune  probably  put  the  following  in  cold  type  in  1878,  be- 
cause English  of  Indianapolis  was  a  Democrat.  It  is  too 
keen  in  these   days,  to  print  so  much  truth  about  usury : — 

Any  one  who  has  lived  in  the  West  during  the  past  five  or 
six  years  can  readily  judge  what  effect  English's  hard  cash 
and  mortgage  record  will  have  upon  the  voters  of  his  section. 
No  class  of  men  have  made  themselves  so  obnoxious  as  the 
Western  money-sharks  [except  the  Eastern. — S.  L.].     In  the 


OUR  MONEY  WARS. 


22  7 


years  succeeding  the  war,  thousands  of  men  who,  by  industry 
and  economy,  had  succeeded  in  laying  up  a  few  hundred  dol- 
lars, emigrated  to  the  West  and  purchased  a  farm,  or  em- 
barked in  business.  Most  of  them,  trusting  to  their  past 
success,  gave  mortgages  on  their  property,  paying -from  15  to 
30  per  cent,  interest.  Had  times  continued  prosperous  they 
would  have  been  able,  undoubtedly,  to  meet  obligations. 
But  as  soon  as  the  business  depression  began,  they  found 
themselves  at  the  mercy  of  their  creditors  ;  who  exacted  the 
last  dollar  from  the  poor  debtor.  The  creditor  had  foreseen 
just  the  financial  crisis  which  occurred.  Money  at  once  be- 
came scarce  and  real  estate  a  drug  in  the  market.  With  their 
long  purses,  they  knew  they  were  able  to  carry  the  property 
until  the  advent  of  better  times.  So,  the  moment  there  was 
any  default  in  paying  an  installment,  or  even  the  interest, 
the  sheriff  was  at  the  door.  The  practice  became  known  in 
the  West  as  "  squeezing  ".  The  wrong  lay  not  in  the  creditor 
asking  his  just  due,  but  in  his  taking  advantage  of  the  debtor's 
embarrassment,  to  gain  a  legal  title  to  property  worth  many 
times  the  mortgage,  and  it  is  adding  insult  to  injury  when 
one  of  this  class  asks  for  the  suffrages  of  farmers  and  small 
traders,  from  whom  he  has  "  squeezed  "  every  dollar  possible. 
The  Tribune  ,  which  was  one  of  the  chief  causes  of  our 
"seven  years  of  famine  in  a  land  of  plenty,"  printed  this  in 
1878,  just  before  "  resumption  "  : — While  the  laborer,  whose 
wages  were  reduced, — or  the  capitalist,  large  or  small,  whose 
money  was  invested  in  manufactures  or  stocks  which  depre- 
ciated in  value, — has  suffered  severely,  there  is  a  very 
numerous  class  who  have  become  much  richer  by  the 
changes  in  values.  Men  whose  capital  was  invested  in 
mortgages,  for  example,  receive  the  same  secure,  and  in 
most  cases,  undiminished  income  ;  while  the  actual  cost  of 
living  for  them  has  fallen  2,2,  Per  cent,  since  1876. 


The  Clearing-house  of  New  York  passed  a  resolution  in 
1878,  when  the  Sub-Treasury  was  admitted  to  the  Clearing- 
house, forbidding  the  use  of  silver  certificates  in  settlement 
of  Clearing-house  balances. 


The  National  Banks,  in  1878,  were   bragging   about  their 
having  paid  86  million  dollars   in  taxes  in    14   years.     They^ 
said  nothing  about  having  drawn  350  millions  of  interest,  in 
that  time, 


228  OUR  MONEY  WARS. 

The  New  York  Tribune  said  early  in  1879  : — A  part  of  the 
nation's  net  earnings,  in  1878,  was  applied  to  the  extin- 
guishment of  foreign  debt — perhaps  $300,000,000.  Another 
part  was  secured  by  the  Treasury,  in  preparation  for  resump- 
tion— about  $94,000,000.  But,  if  the  estimate  of  Mr.  David 
A.  Wells  is  correct — that  the  nation  accumulates  wealth,  in 
excess  of  all  its  expenditures,  at  the  rate  of  about  $500,000,- 
000  yearly, — over  $100,000,000  of  idle  capital  must  have 
been  stored  up  during  the  year  1878  ;  and  an  amount  nearly 
or  quite  as  large  in  1877,  awaiting  a  restoration  of  confidence 
and  prosperity. 


Failures. — The  following  table  of  failures  is  taken  from 
Hunt's  Merchants'  Magazine  for  the  years  from  1862  to 
1870;  the  rest  from  other  sources  ;  up  to  1871  they  are  only 
for  Northern  States. 

Year.  Failures.  Liabilities. 

1862 ^652 $  23,049,000 

1863 495 7,899,000 

1864 520 8,579,000 

1865 530 17,625,000 

1866 632 47,333,000 

1867 2,386 86,2 18,000 

1868 2,197 57,275,000 

1869 2,41 1 65,246,000 

1870 3,160 79,697,000 

1871 2,915 85,252,000 

1872 4,069 121,056,000 

1S73 S^Si 228,490,000 

1874 5>83° 159,239,000 

1875 7.740 201,060,353 

1876 9,002 191.117,786 

1877 8,872 ...  190,669,930 

1878 10,478 •  234,363,132 

1879 6,658 98,149,053 

1880 4,735 65,752,000 

1881 5,582 81,155,932 

1882 6,738 102,000,000 

1883 9,184 172,874,172 

1884 10,968 226,343,427 

1885 ir,2ii 267,340,264 

Mark  how  few  the  failures  during  what  the  gold-bugs  call 


OUR  MONEY  WARS. 


229 


"  inflation  times  "  ;  how  they  climbed  toward  the  panic  year, 
1873;  and  how  heavily  they  bore  during  our  "return  to 
honest  money  !  "  And  how  steadily  they  climbed  again  in 
the  ensuing  honest  money  epoch. 

One  Soweth — Another  Reapeth. — That  worst  of  all 
'  our  famine  years,  1878,  produced  the  following  harvest  of 
interest,  according  to  New  York  "Iribune  of  January,  1879  : — 
Some  surprise  has  been  expressed  at  the  fact  that,  while 
many  millions  of  the  four  per  cents,  have  been  taken  by 
permanent  investors,  who  are  not  holders  of  called  sixes,  the 
purchases  of  railroad  bonds,  and  the  safest  investment  stocks, 
have  also  been  very  large.  During  last  week,  the  recorded 
sales  of  railway  bonds,  in  the  Stock  Exchange,  amounted  to 
about  $6,000,000,  and  during  the  previous  week,  to  nearly 
$5,000,000.  It  is  presumed  that  the  unrecorded  sales  were 
much  larger.  But  it  should  be  remembered  that  the  amount 
disbursed  in  interest  and  dividends  has  been  very  large. 
Besides  the  January  interest  on  the  public  debt, — about  $22,- 
000,000, — the  interest  on  bonds  of  solvent  railroads  amounts 
to  about  $47,000,000  each  half  year,  the  greater  part  of 
which  is  payable  in  January.  The  half-yearly  dividends  on 
paying  railroad  stock  amounts  to  at  least  $35,000,000.  The 
interest  on  municipal,  county  and  State  bonds,  which  still 
pay  promptly,  must  exceed  $25,000,000  each  half  year.  The 
dividends  on  National  bank  stocks,  are  $14,000,000  half- 
yearly.  And  the  dividends  on  manufacturing  stocks,  even 
in  the  present  depressed  condition  of  industries,  must  ex' 
ceed  $40,000,000  half-yearly.  Of  about  $161,000,000  thus 
disbursed  in  interest  and  dividends  for  the  half-year, — ex- 
clusive of  interest  on  the  public  debt, — certainly  more  than 
half  is  paid  in  January ;  so  that  the  sum  disbursed  in  Janu- 
ary, to  be  reinvested,  or  applied  to  the  personal  expenses  of 
investors,  must  be  over  $100,000,000.  As  long  as  United 
States  bonds,  and  other  first-class  securities  are  offered  at 
low  rates  and  in  large  amounts,  a  large  proportion  of  the 
sums  disbursed  will  naturally  seek  such  investments  ;  the 
more  because  such  securities  may  be  expected  to  advance  in 
price,  before  the  return  of  full  prosperity  in  commerce  and 
manufactures  invites  enlargement  of  the  capital  therein 
employed. 

1S79. 

A    Resolute    Start. — The  following  resolutions    of  the 


230  OUR  MONEY  WARS. 

New  York  Associated  Banks  took  effect  January  1,  1879 — 
the  day  of  Resumption  : — "  1.  To  decline  to  receive  gold 
coins  as  '  special  deposits  '  ;  but  accept  and  treat  them  only 
as  "  lawful  money  "  !  2.  To  abolish  special  exchanges  of 
gold  checks  at  the  Clearing-house.  3.  To  pay  and  receive  bal- 
ances between  banks  at  Clearing-house  in  either  gold  or  the 
United  States  legal-tender  notes.  4.  To  receive  silver  dol- 
lars upon  deposit  only  under  special  contract  to  withdraw 
the  same  in  kind.  5.  To  prohibit  payments  of  balances  at 
Clearing-house  in  silver  certificates  or  in  silver  dollars,  ex- 
cepting as  subsidiary  coin  in  small  sums  (say  under  $10). 
6.  To  discontinue  gold  special  accounts,  by  notice  to  dealers 
to  terminate  them  on  January  1." 

Thus  in  every  way  they  "  headed  off  "  gold  payments  and 
the  use  of  silver. 


The  New  York  Times,  in  1878,  had  concluded  an  article 
on  resumption  with  the  following — which  is  very  noticeable 
from  such  a  paper : — The  simple  fact  is  the  Associated 
Banks  of  New  York  propose  to  use  their  power  to  exclude 
the  silver  dollar  from  commerce,  in  defiance  of  the  laws  and 
the  will  of  the  people.  They  must  naturally  expect  stubborn 
and  persistent  opposition  ;  and  such  opposition  will  not  be 
carried  beyond  the  bounds  of  reason,  if  it  shall  compel  the 
banks  to  share  in  the  work  of  resumption. 

A  Devouring  Demon  in  Philadelphia. — Judge  Kelley, 
summing  up  his  speech  in  Congress  on  Resumption,  February 
14,  1879,  gives  this  as  the  state  of  things  in  Philadelphia,  in 
January  of  that  year  :  "  Thus  it  is  shown,  Mr.  Speaker,  that 
by  the  erection  of  22,111  new  buildings  ;  by  the  improvement 
and  extension  of  7,045  other  buildings  ;  by  the  opening  of 
more  than  54  miles  of  new  streets,  and  the  curbing,  paving 
and  laying  sidewalks  of  99  miles  of  street,  by  the  laying  of 
92^  miles  of  gas-mains,  and  the  erection  of  2519  public  lamps; 
by  the  addition  of  nearly  131  miles  of  water-mains,  and  the 
construction  of  nearly  57  miles  of  main  sewers,  and  the  in- 
crease by  about  70  per  cent,  of  the  foreign  commerce  of  the 
city,  ///('  vahce  of  Philadelphia  has  been  reduced  $ij,  000,000. 
Consequently,  they  who  have  accomplished  this  work  have 
not  delved  and  wrought  and  builded  for  themselves.  No, 
sir,  ruin  has  pursued,  as  an  avenging  demon,  enterprise 
wherever  it  has  engaged  in  productive  business.     He  only 


OCA'  MONEY  WARS. 


'■3* 


has  profited  by  their  toil  who  lias  wrapped  his  talent  in  a 
napkin  of  untaxed  government  bonds,  and  brought  it  forth 
for  use  only  when  the  products  of  labor,  energy  and  enter- 
prise were  to  be  sacrificed  at  sheriff's  or  other  forced 
sales. 

"  But,  sir,  the  sheriff's  sale  was  not  the  only  joyous  event 
with  which  the  stricken  people  of  Philadelphia  were  made 
to  welcome  the  great  fact  of  equivalency  between  our  paper 
money  and  gold.  For  on  the  first  clay  of  the  '  glad  New 
Year,'  the  owners  of  13,582  properties,  within  the  limits  of 
the  city,  on  opening  their  morning  papers,  were  pleasantly 
greeted  by  name,  by  the  receiver  of  taxes,  with  notice  that 
their  taxes  for  1878  were  in  default  :  and  that  unless  they 
were  paid  on  or  before  the  15th  of  the  month,  preliminary 
steps  would  be  taken  to  secure  their  collection.  Living  in 
enforced  idleness,  as  thousands  of  the  most  industrious  and 
thrifty  of  them  are,  think  you  that  this  was  a  grateful  New 
Year's  greeting  ?  " 

He  shows,  then,  that  immediately  after  resumption,  the 
following  appeared  in  the  organ  of  the  Philadelphia  sheriff, 
the  Record : 

"  Sheriff  Wright,  on  January  6,  will  begin  the  largest  sale 
of  real  estate  ever  held  by  any  sheriff  in  this  city.  There  are 
692  writs,  covering  about  1,000  properties.  The  sale  on  the 
first  clay  will  begin  at  4  o'clock,  in  the  new  court-house,  and 
extend  from  No.  370  on  the  list  to  No.  692." 

About  that  time  in  1879,  the  Philadelphia  Times  called  a 
halt,  in  "  paying  large  salaries  and  erecting  costly  public 
buildings,  while  the  money  to  pay  for  them  can  only  be  got 
by  the  seizure  of  citizens'  property  at  the  hands  of  the 
sheriff." 

Well  might  Philadelphians  ask,  with  Solon  Chase  of  Maine, 
"  Who  gets  the  hay  ?  " 

This,  mind  you,  was  in  thrifty  Philadelphia,  the  fountain- 
head  of  co-operative  building  societies — the  city  of  homes — 
the  city  where  people  own  their  homes. 

More  or  less. 

England  a  Thousand  Millions  Out. — Judge  Kelley,  on 
April  17/1879,  quoted  Ernest  Seyd,  "  the  ablest  statistician 
in  England,"  as  saying  that  demonetizing  of  silver  by  Ger- 
many had  cost  England  a  thousand  million  dollars  of  her 
capital,  in  three  years;  and  that  she  was  losing  in  a  larger 


232  OUR  MONEY  WARS. 

ratio  in  1879.  "  Her  factories  and  mines'  are  closed.  Such 
is  her  immense  wealth,  that  her  land  is  in  parks  and  game- 
preserves  for  the  sport  of  the  aristocracy  and  the  gentry. 
She  looks  to  us  and  other  nations  for  most  of  her  food.  As 
for  Germany,  after  her  great  victory  over  the  French,  her  con- 
dition is  worse  than  that  of  England." 

California  Cleansed. — 1879  saw  a  purifying  cyclone 
sweep  over  California,  the  results  of  which  were  a  new  and 
better  constitution  ;  the  driving  of  the  gamblers  of  the  stock 
exchange  from  San  Francisco  to  New  York,  and  the  fall  of 
seats  in  their  stock  exchange  from  $35,000  to  $5,000.  They 
swarmed  in  New  York  in  the  Bored  Building  ;  but  did  not 
succeed,  as  expected,  in  teaching  all  our  servant-girls  and 
longshoremen  to  gamble  in  stocks,  California  fashion. 

Gold  Big-Bug  Papers.  —  About  this  time  the  N.  Y. 
Graphic,  a  silver  paper,  said  : — The  New  York  press  does 
represent  the  "  syndicate  "  and  the  large  money-lenders  more 
than  any  other  class  of  the  community.  It  is  believed,  and 
stated,  without  contradiction  so  far,  that  the  N.  Y.  World  is 
under  the  control  of  August  Belmont,  and  the  Philadelphia 
members  of  the  syndicate.  It  is  they  who  are  the  money- 
backers  of  the  paper  ;  and  it  is  understood  that  it  is  their 
interests,  both  in  politics  and  business,  which  are  represented 
by  the  course  of  that  journal. 

The  N.  Y.  Times  is  supposed  to  be  inspired  by  ex-governor 
Morgan,  also  a  member  of  the  syndicate.  Then  the  other 
inlluences  back  of  the  Times  are  the  very  rich  men  who  have 
direct  relations  with  Wall  Street,  and  the  leading  money  in- 
terests there. 

The  Tribune,  it  is  popularly  supposed,  is  partially,  if  not 
wholly,  owned  by  Jay  Gould.  His  interests  are  those  of  a 
"  bear  ".  By  insisting  upon  the  gold  unit  of  value,  prices 
are  depressed,  and  the  millionaires  have  common  interests 
the  world  over;  being  the  representatives  of  the  creditor 
class,  who  naturally  wish  their  money  to  have  the  largest 
possible  purchasing  power. 

The  Herald  is  owned  by  a  very  rich  man,  James  Gordon 
Bennett ;  supposed  to  be  worth  some  six  million  of  dollars, 
and,  of  course,  his  interests  are  with  the  creditor  class.  • 

The  Journal '  oj 'Commerce  and  the  Bulletin  are  peculiarly  sub- 
ject to  Wall  Street  influences,  especially  those  of  the  great 
creditors. 


OUR  MONEY  WARS.  233 

The  Sun  has  lately  given  some  signs  of  repentance  of  its 
golden  heresy. 

Of  course  the  creditor  interests  are  powerful  in  the  Even- 
ing Post  office,  although,  we  judge,  the  attempt  to  pay  in  gold 
debts  contracted  in  paper  money,  in  the  purchase  of  real 
estate,  has  proven  a  very  serious  business  for  the  chief  pro- 
prietor of  that  paper.     [Poet  Bryant.] 

Augustus  Schell,  whose  relations  to  the  syndicate  are  well- 
known,  is  a  large  stockholder  in  the  Express  newspaper ; 
which  accounts  for  the  milk  in  that  cocoanut. 

It  will  be  thus  seen  that,  without  any  actual  bribery,  the 
New  York  press,  because  of  its  proprietorship,  is  on  the  side 
of  the  gold  big-bugs,  instead  of  the  people.  It  represents 
a  class  that  has  money  out  at  interest-,  and  wish  to  get  the 
largest  possible  return  for  their  investments.  We  do  not 
say  that  any  editor,  publisher  or  proprietor  of  any  of  the  New 
York  papers  is  purchased  with  money  ;  but,  naturally,  these 
organs  represent  the  people  who  own  them,  and  their  in- 
terests are  very  different  from  those  of  the  great  mass  of  the 
American  people. 


And  now,  in  December,  1891,  a  further  evidence  of  the  stuff 
there  is  in  the  editors  of  the  "  leading  papers  "  is  found  in  this 
concerning  that  infamous  creature  W.  H.  Hurlbert,  now  hid- 
ing from  arrest  (for  perjury  and  wronging  a  woman),  in 
Mexico.  This  passage  is  from  his  old  paper,  the  N.  Y. 
World: — At  about  that  time  Hurlbert  was  taken  on  The 
World  by  Manton  Marble,  the  editor,  as  a  writer  of  edito- 
rials. Later,  when  Tom  Scott  bought  The  World  to  use  it 
for  business  purposes,  Hurlbert  was  made  editor.  He  was 
retained  in  the  editorial  chair  by  Mr.  Jay  Gould,  when  the 
paper  passed  into  Gould's  hands.  With  the  advent  of  the 
present  proprietor  of  The  World  Hurlbert's  services  were 
dispensed  with. 

The  Interest  Equals  the  Public  Debt. — The  interest 
paid  on  the  public  debt,  from  1S60  to  1879,  amounted  to 
$1,916,577,099.35 — an  amount  greater  than  that  of  the  entire 
debt  in  1864;  just  before  the  close  of  the  war.  Such  facts 
should  be  branded  into  the  American  mind ;  and  set  there 
"  as  with  lead  in  the  rock  forever." 

The  Congressional  Silver  Commission  estimated  the  total 


234  OUR  MONEY  WARS. 

indebtedness  of  our  people  in  1879  at  thirteen  billions — 
about  the  same  as  in  1S77.  This  was  one-half  the  total 
wealth  of  the  country. 

What  Gold  the  Banks  Had.— Judge  Warwick  Martin 
wrote  in  1880  : — 

Some  bogus  statesmen,  when  it  suits  their  purposes, 
insist  that  nothing  but  gold  and  silver  coin  is  capital.  The 
National  banks  have  existed  16  years.  It  might  be  interest- 
ing to  learn  from  the  reports  of  the  Comptroller  of  the  Cur- 
rency, how  much  gold  and  silver  coin  these  banks  have  had, 
as  capital,  for  the  last  16  years.  *  *  From  1864  to  1869  these 
banks  had  no  coin  capital.  From  1869  to  1879,  the  average 
was  $26,000,000 ;  nearly  all  of  which  was  held  in  the  city 
of  New  York.  Sometimes  these  banks  have  held  more,  but 
often  less  than  this  average.  *  *  According  to  the  bullion 
definition,  for  ten  years  these  banks  had  an  average  of  three 
per  cent,  capital.  At  another  time  not  one  per  cent.  Now 
[1880.]  they  have  $109,000,000  to  secure  over  $1,204,000,000 
liabilities.  They  have  aggregated  coin  capital  very  slowly  ; 
though  in  the  last  16  years  these  banks  have  received  from 
the  Treasury  over  $300,000,000  in  gold  :  which  they  sold  at  a 
premium. 

Bonds  Sold  After  January  i,  1879. — Martin  said  : — The 
four  per  cent  bonds  sold  after  this  date  were  not  purchased 
because  resumption  had  taken  place.  They  were  purchased 
because  business  was  still  in  a  prostrate  condition,  and  was 
purposely  so  kept,  the  same  as  before  so-called  resumption, 
so  that  bonds  might  be  sold.  It  would  not  do  to  permit 
business  to  revive  until  these  bonds  were  sold.  The  busi- 
ness of  the  country  had  to  be  kept  down,  so  that  there  would 
be  no  investments  of  money  in  anything  but  these  bonds. 
Business,  therefore,  remained  prostrate  for  more  than  six 
months  after  professed  resumption.  There  was,  up  to  the 
last  of  July,  1879,  scarcely  a  ripple  upon  the  business  waters. 
The  purchase  of  bonds  for  legal-tender  notes,  was  about  the 
only  business  being  transacted.  No  other  could  be  permit- 
ted, or  the  bonds  could  not  be  sold.  On  April  18,  the  bonds 
were  all  contracted  for,  but  they  were  not  paid  for  until 
months  after  the  sales.  To  permit  business  to  revive  and 
the  money  of  the  country  to  be  employed  therein,  before  this 
money  for  the  bonds  sold  was  collected,  would  have  caused 
the  failure  of  the   banks   and  bankers  composing  the   syn- 


OUR  MONEY  WARS. 


235 


dicate,  to  whom  the  bonds  had  been  sold.  Time  had  to  be 
given  these  banks  and  bankers  to  make  sales  of  these  bonds 
in  England  and  in  the  United  States,  or  they  could  make  no 
money  out  of  their  purchases,  and  might  be  ruined.  This 
was  done  at  the  expense  of  the  business  of  the  country. 
The  people  had  to  suffer.  The  syndicate  had  to  be  and  were 
protected.  So  soon  as  the  bonds  were  all  paid  for,  the 
money  in  the  banks  and  in  the  Treasury,  which  had  been  so 
long  locked  up,  was  released. 

Resumption  was  not  attempted  until  legal-tender  notes 
were  made  equal  to  coin.  This  is  admitted  by  Mr.  Sherman. 
If  these  notes  had  not  been  made  equal  to  coin  by  being 
received  for  duties,  no  resumption,  so-called,  could  have 
taken  place.  The  whole  $346,000,000  legal-tender  notes 
would  have  gone  to  the  Treasury  for  redemption,  as  the  law 
contemplated.  There  being  in  the  Treasury  for  redemption 
purposes  only  $133,000,000  coin,  a  failure  of  the  Govern- 
ment would  have  taken  place. 

Gold  Rushes  from  Europe. — After  the  money  lords  let 
up  on  us,  in  1879  (as  they  promised  they  would,  if  we  paid 
"  the  pound  of  flesh  "),  and  gave  us  prosperity, — gold  rushed 
hither  from  Europe.  We  had  been  too  poor  to  get  into  debt 
to  her  latterly  ;  and  she  had  shoved  the  bonds  back  on  us, 
when  they  rose  to  a  high  figure.  So  when  her  poor  crops 
forced  her  to  use  our  food  products,  she  had  to  shell  out  gold 
for  them.  The  N.  Y.  World  said,  December  1879  : — All 
Europe  said,  six  months  ago,  that  by  the  end  of  the  present 
year,  the  balance  of  trade  in  our  favor  in  merchandise  transac- 
tions, would  become  a  balance  against  us.  But  Europe  is 
changing  its  mind.  The  Bank  of  France  alone,  since  June  1, 
last,  has  lost  over  54  millions  of  dollars  in  gold  ;  which  has 
come  to  New  York ;  and  the  drain  still  continues,  to-day,  as 
severe  as  ever.  On  August  1,  1879,  the  Bank  of  England  had 
more  than  35  millions  of  pounds  sterling  of  coin  and  bullion. 
On  November  26,  1879,  it  had  but  28  millions.  The  coin 
and  bullion  stock  in  toe  Bank  of  Germany  fell  between  Sep- 
tember 1  and  October  15,  1879,  by  at  least  three  millions  of 
pounds  sterling.  According  to  the  best  attainable  information, 
the  stock  of  gold  and  silver  in  the  principal  European  banks, 
in  October  last,  was  about  1,000  millions  of  dollars  ;  of  which 
about  400  millions  were  in  silver. 


236 


OCR  MONEY  WARS. 


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I 

OUR  MONEY  WARS.  237 


CHAPTER  XV. 

1880  to  1885. 

THE  TRIUMPH  OF  THE  PLUTOCRATS. 

1880. 

President  Hayes,  in  a  message  in  1880,  congratu- 
lates the  country  upon  the  successful  resumption  of  specie. 
Judge  Martin  shows,  at  length,  how  and  why  it  has  not  been 
successful, — has  been,  indeed,  a  farce  carried  out  contrary 
to  law. 


An  article  in  the  Political  Science  Quarterly,  in  1890,  makes 
the  statement  that  in  1879-80,  one-half  of  all  the  mortgages 
in  Indiana  were  forclosed. 

Who  Held  the  Bonds. — A  radical  paper  said  in  1880  : — 

They  used  to  sing  us  such  sweet  songs  about  the  value  of 
United  States  bonds  as  a  boon  to  the  savings-banks  ;  and  to 
the  money  people,  all  over  the  country  who  wanted  a  safe 
investment  for  their  little  savings.  Doubtless  there  was  con- 
siderable truth  in  the  song;  but  there  is  much  less  truth 
now.  The  following  chunk  of  solid  facts  lets  daylight  upon 
the  whole  matter ;  and  we  commend  it  to  the  serious  atten- 
tion of  our  readers  : 

The  Sunday  Herald  claims  to  have  information  as  to  the 
largest  holders  of  United  States  bonds.  The  list  of  these 
millionaires,  in  this  country  and  Europe,  is  as  follows  :  Mr. 
Vanderbilt,  37  millions;  Mrs.  A.  T.  Stewart,  30  millions ; 
Jay  Gould  13  millions  registered  and  a  large  amount  of  cou- 
pon bonds  ;  an  estate  in  Boston,  and  three  or  four  persons  in 
New  York  have  10  millions  each  ;  the  estate  of  Moses  Taylor 
five  millions  ;  D.  O.  Mills,  four  millions.  These, — with  an 
unmarried  lady  in  New  York,  name  not  given  [probably 
Catherine  Wolfe],  who  has  eight  millions, — are  the  largest 
holders  in  the  United  States.  In  Europe  the  Rothschilds, 
together,  hold  the  evidences  of  nearly  one-quarter  of  the 
bonded  debt.     They  have  nearly  400  millions.     In  England 


238  OUR  MONEY  WARS. 

the  Baroness  Burdett  Coutts  Bartlett  has  20  millions  ;  the 
Duke  of  Sutherland  five  millions,  and  Sir  Thomas  Brassey 
five  millions. — Boston  Journal. 

Currency  of  Fifteen  Nations. — B.  S.  Heath,  gives  the 
following,  in  1880  : — Nearly  all  civilized  nations  recognize  the 
sovereign  right  of  Government  to  make  its  Treasury  notes 
legal  tender.  In  the  following  table,  we  follow  the  figures  of 
the  Director  of  the  Mint;  adding  thereto  the  statement  of 
the  amounts  of  paper  money  which  is  legal-tender  in  the 
countries  named : 


Countries. 


,.   nSliver,       Total  Paper. 
hull    lender.  r 


Paper 

Legal 

Tender. 


United  States.  .  .  %  o 
Great  Britain...  .     618, 

Sweden 15. 

Norway 10 

Denmark 20. 

Prance 733 


Austria. 
Italy  . . . 
Russia.  . 
Spain.. . 
Peru  .  .  . 
Brazil  .  . 
Canada 
Japan  .  . 
Turkey  . 


43 

17 
roS 


75°>497 
619,043 

000,000 
000,000 
000,000 
400,000 
200,000 
,000,000 
,000,000 
,000,000 
62,000 


$45,206,200 


366,700,000 

27,360,000 


40,000,000 
1,819,900 


1,291,385 
,000,000 


10,000,000 


V  »3>943>799 

209,148,875 

1 1,680,000 

10,300,000 

18,900,000 

466,755,000 

322,938,854 

315,000,000 

587,907,562 

33,795,000 

13,900,000 

91,000,000 

29,047,74^ 

143,000 

100,000,000 


$346,601,000 

200,000,000 

11,680,000 

10,300,000 

18,900,000 


128,993,411 

305,000,000 

360,000,000 

*40,ooo,ooo 

13,900,000 

91,000,000 

10,674,850 

*  1 00,000,000 

100,000,000 


The  following  shows  how  we  were  frightening  Europe 
about  her  gold  in  18S0  : — Paris,  September  10.  The  subject 
which  engrosses  public  attention  here,  and  throughout  the 
continent,  is  the  enormous  exportation  of  gold  to  America. 
Notwithstanding  the  efforts  made  to  arrest  its  outflow  from 
Germany,  by  raising  the  rate  of  discount,  and  the  limited 
payment  of  gold  to  certain  centers  of  disbursement,the  ex- 
portation is  assuming  alarming  proportions.  The  steamer 
that  left  Hamburg  on  the  4th  inst.  took  out  3,000,000  marks; 
the  steamer  of  the  9th  took  out  nearly  3,000,000  more  ;  and 
Saturday's  Hamburg  steamer  which  calls  at  Havre,  will 
probably   take  out  between  4,000,000  and  5,000,000  marks. 

*  As  given. 


OUR  MONEY  WARS.  239 

At  two  Paris  banking-houses  there  are  large  shippers  of 
gold ;  and  it  was  stated  to-day  that  they  will  have  shipped 
this  week  3,000,000  francs  each.  The  magnificent  cotton 
crops  in  America,  this  season,  will  no  doubt,  influence  the 
exchange  against  France  for  the  next  three  months. 

Greenbacks  and  National  Bank  Notes  Compared. — 
Judge  Martin  made  elaborate  comparisons  between  Green- 
backs and  National  bank  notes  in  1880.  Here  are  some  of 
his  points  :  1.  Since  the  first  issue  of  National  bank  notes, 
the  laws  have  made  the  legal-tender  notes  perform  for  the 
National  banks  all  the  offices  which  coin  did  for  the  two  old 
banks  of  the  United  States,  and  for  the  State  banks.  2. 
Legal-tender  notes  were,  during  the  bank  suspension  in  the 
Fall  of  1873,  in  the  city  of  New  York,  worth  one  per  cent, 
and  even  one  and  a  half  per  cent.,  over  the  notes  of  National 
banks.  They  were  needed  to  make  up  the  reserves  of  the 
banks,  which  National  bank  notes  could  not  do.  3.  The 
legal-tender  notes  of  the  United  States  are  now  worth  one 
per  cent,  premium  over  newly-coined  American  gold,  in  all 
the  commercial  cities  of  Great  Britain,  and  on  the  continent. 
They  are  more  convenient  than  coin  ;  and  preferred  by 
travelers.  They  are  current  everywhere.  4.  These  legal- 
tender  notes  are  worth  more  than  gold  in  the  large  cities  of 
the  United  States — owing  to  convenience  and  safety.  This 
cannot  be  said  of  the  notes  of  the  National  banks.  5.  In 
Canada,  legal-tender  notes  are  worth  two  per  cent,  premium 
over  gold.  On  the  Pacific  coast,  they  are  worth  from  one 
to  two  per  cent.  Why  cannot  the  people  be  supplied  with 
this  money,  when  they  desire  it  so  much  ? 


The  annual  meeting  of  the  National  Land,  Labor  and  Cur- 
rency League  of  Canada,  for  1880,  was  held  at  Guelph, 
Canada,  Mr.  YVm.  Wallace,  M.  P.,  President,  in  the  chair. 
Their  demands  were  precisely  like  those  of  theGreenbackers 
of  the  United  States. 

The  Bonded  Debts  of  all  Nations. — It  is  given  by  Faw- 
cett  in  his  "  Gold  and  Debt  "  at  32  billion  dollars;  taking 
the  increase  of  the  United  States  bonded  indebtedness  since 
the  publication  of  that  book,  it  was,  in  1880,  about  t,t,  billions. 
The  holders  of  these  bonds  against  the  civilized  nations 
absorb  from  the  product  of  labor  an  annual  income  of  $  1,- 
700,000,000  ;  mostly  payable  in  gold.     They,  to  a  very  large 


240  OUR  MONEY  WARS. 

extent,  control  the  precious  metals  used  as  money,  and  the 
mines  that  yield  them  ;  and  are  very  generally,  in  all  the 
commercial  centers,  advocates  of  a  single  gold  standard  or 
specie  basis  money. 

To  Pay  the  Bonds  at  Once. — The  following  from  the 
N.  Y.  Times,  of  October,  1880,  gives  the  bullionist  aspect  of 
a  very  interesting  piece  of  financial  history.  Of  course, 
every  one  knows  that  the  genuine  Greenbacker, — who  de- 
spises all  metal  money — sometimes  advocates  silver,  "  not 
because  he  loves  silver  more  but  gold  less  ;  "  and  knows  that 
the  more  we  push  silver  to  the  front,  the  sooner  we  will  be 
rid  of  all  metal  money,  except  as  a  commodity.  The  Times 
said : — On  April  5  of  this  year,  Mr.  Weaver  of  Iowa,  at  pres- 
ent the  Greenback  candidate  for  the  Presidency,  got  a  vote 
on  certain  resolutions  brought  in  by  him  at  the  beginning  of 
the  session.  He  had  been  put  off,  from  week  to  week,  by 
the  Speaker,  Mr.  Randall,  of  Pennsylvania,  who  knew  very 
well  that  if  his  party  in  the  House  zvere  let  to  vote  on  Mr. 
Weaver's  resolutions  they  would  vote  wrong.  The  result 
showed  that  this  fear  of  Mr.  Randall's  was  wholly  just.  The 
resolutions  declared — that  there  should  be  no  further  re- 
funding; but  that  the  United  States  bonds  should  be  paid 
off  as  quickly  as  they  could  be  ;  and  to  this  end  the  Mints 
should  be  employed,  to  their  full  capacity,  in  coining  stand- 
ard silver  dollars.  In  the  30-minutes  debate  which  went  be- 
fore the  vote,  General  Garfield  made  a  strong  speech  against 
the  resolutions.  Mr.  Kelley  of  Pennsylvania  and  Mr.  Wea- 
ver spoke  for  them.  Not  a  voice  was  raised  on  the  Demo- 
cratic side  against  them.  When  the  vote  was  taken  it  was 
found  that  73  Democrats,  and  only  2  Republicans,  with  10 
Greenbackers,  were  in  favor  of  them  ;  88  Republicans  with 
only  29  Democrats  [Eastern]  were  opposed  to  them. 

Pretty  Good  Picking. — Here  is  the  logical  results  to  the 
stockholders  of  the  National  banks,  as  shown  by  the  retiring 
president,  Wm.  H.  English,  of  the  First  National  Bank  of 
Indianapolis  : — As  an  evidence  of  how  the  banks  have  been 
able  to  get  along,  in  spite  of  the  "  ruinous  taxation  ",  we 
append  an  extract  from  the  report  of  Mr.  Wm.  H.  English, 
upon  retiring  a  few  weeks  ago  from  the  presidency  of  his 
bank,  which  he  says  has  run  14  years  :  "  In  the  meantime  it  has 
voluntarily  returned  $4,500,000  of  capital  back  to  its  stockholders ; 
besides  paying  them  in  dividends  $1,196,250,  part  of  which  was 


OUR  MONEY  WARS.  241 

in  gold.  And  I  now  turn  it  over  to  you  with  a  capital  unim- 
paired and  $327,000  of  undivided  earnings  on  hand.  I'o  this 
may  be  fairly  added  premium  of  L  rnited  States  bonds  on  hand 
— at  present  prices  amounting  to  >j6,ooo  ;  besides  quite  a  large 
amount  for  lost  and  destroyed  bills. 

"  May  I  not  safely  leave  these  grand  results  as  a  perma- 
nent testimonial  of  the  fidelity  and  careful  and  judicious  man- 
agement of  my  administration  ?  " 

According  to  this  statement,  the  profits  of  this  bank  for 
the  fourteen  years  it  has  been  in  existence  were  Two  millions 
and  fifty-nine  thousand,  two  hundred  and  fifty  dollars. 

The  capital  stock  of  the  bank  is  now  half  a  million.  We 
venture  to  assert  that  no  legitimate  business  in  Indiana  has 
paid  such  profits,  during  the  same  period,  as  this  bank : 
or,  for  that  matter,  as  any  well  managed  National  bank. 
The  banks  have  been  carried  forward  upon  the  prosperous 
tides  of  privilege  and  subsidy  ;  and  to  these  they  would  now 
add  immunity  from  taxation.  This  they  are  likely  to  secure ; 
for  they  are  almost  all-powerful  with  Congress.  But,  woe  to 
the  Congressman  who  serves  them  in  this  last  scheme  of  ex- 
tortion !     A  day  of  reckoning  comes. — Tcrre  Haute  Express. 

Compound  Interest. — Occasionally  a  strong  proof  of  the 
consuming  power  of  interest  reminds  one  of  the  impression 
made  upon  Napoleon  by  the  study  of  a  compound-interest 
table.  He  said :  "  There  is  one  thing,  to  my  mind,  more 
wonderful  than  all  the  rest  :  viz.,  that  the  deadly  fact  buried 
in  those  tables  has  not  before  this  devoured  the  whole 
race." 

Here  is  a  specimen  :  On  Oct.  6,  1854,  Geo.  T.  Walker  of 
Santa  Clara,  Cal.,  gave  Wm.  Hood  a  note  secured  by  a  mort- 
gage, for  $1,850,  for  six  months  ;  interest  at  three  per  cent. 
a  month,  to  be  compounded  if  not  paid  at  the  end  of  each 
month.  Mr.  Walker  went  to  Mexico  before  the  note  came 
due;  and  when  he  returned,  in  or  about  18S0,  his  creditors 
sued  him  and  got  judgment  for  $9,000,000. 


Tilden  was  nominated  in  1S80,  on  a  Wall  Street  platform. 
The  Democrats  had  not  done  this  since  1828,  except  in  1877. 

Gould  Becomes  Respectable. — About  1880,   Jay  Gould, 

who  began  his  large  operations,  by  stealing  nine  million  dollars 

from  the  Erie  RR.  (which  he  refunded  in  preference  to  going 

to  jail,  and  covered  back  into  his  pocket,  by  the  rising  of  Erie), 

16 


2<-2 


OUR  MONEY  WARS. 


forced  himself  into  the  "  highest  financial  circles."  We 
then,  at  length,  find  such  men  as  Moses  Taylor,  Robt. 
Lenox  Kennedy,  J.  P.  Morgan  and  Saml.  Sloane  associated 
with  him,  as  Western  Union  directors — not  to  mention  Schell, 
Sage,  Cornell,  Dillon,  Field  and  Huntington,  who  were  as- 
sociated with  him  in  various  enterprises. 


The  fountain  of  gambling  in  the  United  States  is  Wall 
Street.  Is  it  honest  gambling,  or  dishonest?  Is  the  game 
"  straight  "  or  "  crooked  "  ?  Mr.  Henry  Clews  in  a  recent 
work  maintains  that  it  is  "  straight  ". 

"  I  recollect  the  time,"  he  says,  "  when  men  in  the  higher 
walks  of  life  would  have  been  ashamed  to  be  seen  in  Wall 
Street.  Now  men  in  the  same  sphere  are  proud  of  the  dis- 
tinction, both  socially  and  financially." 

Another  Straw  in  1890. — Sumner,  of  Yale,  lately  came 
down  from  his  high-horse,  and  lectured  to  the  boys  about  the 
good  and  bad  gambles  of  Wall  Street.  But  he  is  too  prosy 
and  antiquated,  and  now  they  have  a  fresh  young  man  right 
from  the  spot — F.  W.  Hopkins,  Yale,  '80.  "  Mr.  Hopkins 
is  with  the  brokerage  firm  of  S.  V.  White  &  Co.,  of  New  York  ; 
and  has  chosen  for  his  subject  a  course  on  'Investment 
Securities.'  The  different  forms  of  securities  will  be  de- 
scribed and  distinguished  from  one  another,  with  illustrations 
— and  the  advantages  and  disadvantages  of  each  for  invest- 
ment will  be  explained. 

"  With  the  exception  of  a  few  general  remarks  on  the  sub- 
ject in  the  political  economy  classes,  this  topic  has  been 
rigidly  suppressed;  and  never  before  has  the  open  discussion 
of  Wall  Street  methods  been  allowed  in  the  classic  precincts 
of  old  Yale." 

The  Tonnage  of  the  Lake  Ports. — One  great  cry  of  the 
gold-bugs  is  that  we  need  a  coin  basis,  because  our  foreign 
trade,  as  Garfield  falsely  stated,  is  "transacted  in  coin."  If 
this  were  true  it  would  not  offer  a  weighty  reason  in  view  of 
such  facts  as  this  given  by  Alex.  Mitchell's  son-in-law,  at  the 
Bankers'  Convention  of  1880: — The  tonnage  annually 
entered  and  cleared  in  the  Milwaukee  Custom  House  district 
is  larger  than  that  in  either  Boston,  Philadelphia  or  Balti- 
more. The  commerce  of  the  ports  of  Lake  Michigan,  judged 
by  the  tonnage  of  vessels  entered  and  cleared,  is  almost  as 
large   as  the   whole   of  the  foreign  commerce  of  New  York 


OUR  MONEY  WARS. 


;-Jj 


City.  The  commerce  of  the  lake  ports  is  as  large  as  the 
whole  foreign  commerce  of  the  United  States. 

A  Bright  Idea — Whose? — Dr.  E.  P.  Miller  keeps  a  hy- 
gienic institute  in  New  York  City.  He  is  an  indefatigable 
worker  and  writer  for  what  he  considers  true  currency  re- 
form, but  has  not  as  yet  (1880)  been  converted  to  the  "  fiat  " 
idea.  He  had  much  influence  over  Peter  Cooper,  but  has 
been  generally  at  loggerheads  with  the. leading  brains  of  the 
Greenbackers.  He  is  credited  with  the  following,  which 
seems  a  truthful  view  of  the  main  obstacle  to  paying  off  the 
bonds  that  existed  in  the  darkest  times — 1S73  to  1S80  ;  and 
one  not  suggested,  as  far  as  I  know,  by  any  one  else.  Having 
usually  disagreed  with  Dr.  Miller,  I  gladly  credit  him  with 
this  idea  : — Now,  the  charges  made  against  these  papers  in 
that  issue  were  these:  That  by  advocating  the  issue  of 
.Greenbacks  enough  to  pay  off  the  bonds,  they  were  knowingly 
or  ignorantly  working  in  the  interest  of  the  bondholders. 
They  are  doing  so  in  this  way  :  It  would  be  necessary  to 
nearly  treble  the  volume  of  money  to  pay  off  the  bonds,  and 
the  effect  of  trebling  the  volume  of  money  would  evidently 
be  trebling  the  value  of  property.  To  have  the  Government 
issue  1,800  millions  of  Greenbacks,  and  put  them  into  the 
hands  of  the  bondholders,  when  property  is  depreciated  in 
value  as  much  as  it  is  now,  would  enable  them  to  invest  that 
money  in  real  estate,  which,  in  less  than  four  years,  would  be 
worth  more  than  5,000  millions  of  dollars,  and  would  estab- 
lish one  of  the  worst  landed  monopolies  in  the  world.  We  chal- 
lenge any  one  to  refute  this  argument. 

The  true  policy  would  be,  if  more  Greenbacks  are  to  be 
issued,  let  them  be  used  to  start  public  improvements  ;  to  em- 
ploy our  idle  workingmen  ;  to  promote  the  industries  of  the 
country  ;  and  let  the  people  who  now  hold  the  property  have 
the  benefit  of  the  rise.  If  the  money  is  issued,  people  em- 
ployed, business  restored  and  the  country  made  prosperous, 
the  payment  of  the  bonds  will  be  a  matter  that  will  not  be 
difficult  to  accomplish  or  burdensome. 


Immediately  after  writing  the  above,  I  found  an  extract 
from  Dr.  Miller's  paper,  giving  an  interview  with  George 
Francis  Train,  during  the  hard  times,  which  looks  as  if  the 
bright  idea  came  from  that  erratic  seer,  if  Train  was  then 
demented,  we  need  a  few  more  of  the  same  style  of  dement. 


244  0UR  MONEY  WARS. 

He  said  : — Some  Greenbackers  begin  to  see  that  success  this 
fall  would  have  been  a  terrible  defeat.  To  give  bondholders, 
who  have  been  twice  paid  already,  Greenbacks  for  their 
bonds,  would  be  equal  to  making  them  a  present  of  all  the 
mortgaged  property  in  the  land.  Shylock,  with  a  couple  of 
thousand  millions  in  hand,  could  foreclose  the  whole  nation- 
and  two  hundred  thousand  Alabama  bondholders  and  Na- 
tional Bank  shareholders  would  own  48  millions  of  slaves. 

The  Ohio  Idea. — The  N.  Y.  Tribune  said,  after  elec- 
tion in  1880: — "The  defeat  of  Ewing  will  finally  dispose  of 
the  Ohio  Idea.  Only  the  tail-end  of  it  is  alive  in  this  canvass. 
After  a  year  of  successful  resumption,  with  gold  pouring  into 
the  country  at  the  rate  of  two  tons  a  day,  the  irredeemable 
currency  notion  will  speedily  expire.  The  Ohio  Democracy 
will  be  reorganized  on  the  basis  of  State  Rights,  and  a  hard- 
money  currency  supplemented  by  redeemable  Green-backs." 

Ewing  has,  indeed,  given  up  the  fight,  and  is  trying  to 
"  make  money  "  in  New  York,  but  the  Ohio  Idea,  at  this 
writing — 1890 — is  a  very  lively  corpse. 

In  1880,  when  Gen.  Weaver  was  running  for  the  Presi- 
dency, there  was  a  lively  fight  in  Maine,  which  is  thus  spoken 
of  in  the  N.  Y.  World  in  September,  1892,  by  a  man 
Ik  named  Frank  A.  B^rr,  a  neighbor  of  Blaine  : — McKinley's 
political  career  was  practically  born  in  that  old  homestead 
when  Blaine  brought  him  to  Augusta  in  1880,  when  the  big- 
gest fight  of  his  life  was  on  hand.  Twice  during  that  battle, 
when  Blaine  was  beaten  by  the  Greenback  craze,  and  an 
ordinary  man  by  the  name  of  Gen.  Plaistedwas  elected  Gov- 
ernor, Mr.  Blaine  took  McKinley  under  his  arm  and  spoke 
from  the  same  stump  with  him.  It  was  practically  his  start 
in  national  life.  During  that  battle  there  were  scenes  which 
have  never  been  repeated  in  American  politics.  Every  cross- 
roads was  picketed  with  workers,  and  every  schoolhouse  was 
filled  with  a  speaker.  A  dozen  times  during  the  combat, 
which  threatened  the  destruction  of  Garfield's  chances  for 
the  Presidency,  there  were  more  than  150  meetings  a  day  in 
the  State  of  Maine. 

Those  were  the  years  when  the  primest  powers  of  the  Re- 
publican party  were  centered  in  that  September  election,  and 
Mr.  Blaine  dominated  every  feature  of  it,  bringing  to  his 
side  not  only  money  without  stint,  but  men  of  the  highest 
distinction,  many  of  whom  have  passed  to  the  great  unknown, 


OUR  MONEY  WARS.  245 

but  whose  lives  are  a  part  of  the  mighty  history  of  this  Re- 
public. 

Did  I  say  pathos  ?  Yes.  For  not  long  ago  the  great  Sec- 
retary of  State,  when  speaking  of  the  wonderful  events  which 
gather  like  shadows  and  sunshine  over  his  life,  said  in  one  of 
those  moods  which  indicate  fatigue  :  "  Politics  is  a  Vanity 
Fair,  of  which  I  have  been  only  a  part." 

[All  of  which  shows  that  Blaine  was  a  politician  rather  than 
a  statesman,  and  a  politician  on  the  wrong  side.  That  dis- 
gust with  his  work  never  comes  to  the  patriot  who  feels  that 
he  is  fighting  for  the  right. — S.  L.] 

1881. 

The  Carlisle  Refunding  Bill. — January  19,  1881,  the 
Carlisle  Refunding  Bill,  refunding  the  202  million  six  per 
cents  and  470  million  five  per  cents,  at  three  per  cent.,  passed 
the  House.  Efforts  were  made  to  put  the  rate  of  interest 
back  to  three  and  a  half  per  cent.,  and  to  strike  out  the  pro- 
hibition against  receiving  other  bonds  as  security  for  circu- 
lation ;  but  they  did  not  succeed.  With  one  or  two  trifling 
amendments,  the  Senate  on  February  18,  approved  the  bill 
and  returned  it  to  the  House.  The  banks  pretended  to 
believe  that  they  would  have  to  change  the  bonds  at  once, 
and  tried  to  get  up  a  panic.  In  a  week  they  gathered  14 
million  dollars  ;  and  sent  it  to  Washington  to  deposit  — 
against  their  bonds. 

The  Stock  Exchange  collapsed  ;  many  stocks  falling  rap- 
idly. Secretary  Sherman  tried,  in  vain,  to  stop  the  panic  ; 
but  nothing  but  the  knowledge  that  they  would  ruin  them- 
selves,— as  well  as  cause  universal  bankruptcy, — stopped  the 
crazy  course  of  the  bank  officers  ;  and  they  quieted  down — 
apparently  assured  by  Hayes  that  he  would  protect  them. 
At  all  events,  though  the  bill  finally  passed  the  House  on 
March  1,  it  was  promptly  vetoed  by  President  Hayes,  the 
next  day  but  one,  in  a  message  which  took  the  ground,  fairly 
and  squarely,  that  the  measure  was  detrimental  to  the  banks  ; 
and  therefore  was  disapproved  by  him.  Secretary  Windom 
came  into  office  March  5,  and  he  has  been  much  praised  by 
some  for  the  way  he  handled  the  refunding.  The  banks 
were  chuckling — feeling  sure  of  their  five  and  six  per  cent, 
for  another  year.  Windom,  who  really  had  not  150  millions 
jn  any  shape  for  refunding,  played  sharp.     Acting  on  the 


246  OUR  MONEY  WARS. 

idea  that  one  man  with  a  pistol  is  a  match  for  ten  unarmed  ; 
he  announced  on  April  1 1  that  on  July  i  he  would  pay  the 
202  million  sixes  then  maturing  ;  or  so  much  of  them  as 
were  not,  in  the  mean  time,  presented  for  extension  at  the 
pleasure  of  the  Government  at  3^  per  cent.  With  char- 
acteristic cowardice  the  holders  rushed  for  the  3^  exten- 
sion. In  a  month  all  the  sixes  were  sent  in  and  stamped 
with  an  agreement  binding  the  Government  to  nothing,  but 
obliging  the  holders  to  accept  3^.  The  same  game  was 
played  with  the  fives  ;  and  by  August  12,  they  too  were  cov- 
ered in.  These  fives  and  sixes  were,  in  1S82,  regularly  con- 
verted into  three-per-cent  bonds  ;  payable  at  the  pleasure 
of  the  Government ;  and  bond-holders  are  anxious  for  a  two- 
per-cent.  bond  to  run  twenty  years. 

The  report  of  the  Controller  of  the  Currency,  for  1879, 
shows  that  the  profits  of  the  First  National  Bank  of  New 
York  Syndicate  was  $2,153,959  in  distributing  $738,000,000 
of  bonds.  Windom  distributed  the  above  $672,000,000  for 
$10,500. 

On  February  26,  188 1,  the  N.  Y.  World  said  of  the  above 
bank  panic  :  "  It  is  a  terrible  power  which  the  banks  possess 
of  throwing  everything  into  sudden  unhingement  and  con- 
fusion, when  everybody  was  expecting  financial  fair  weather." 

The  Bankers'  Rebellion. — Congressman  E.  H.  Gillette, 
of  Iowa  spoke  of  the  "Bankers'  Rebellion  "  thus  in  1882  : — ■ 
This  bill  went  into  the  Senate,  and  as  soon  as  it  got  there 
we  found  that  the  stand  we  had  taken  had  disturbed  proud 
Senators  a  little  ;  for  they  began  to  write  letters  to  the  Green- 
backers,  asking  for  copies  of  their  speeches  ;  and  the  result 
was  they  did  not  try  to  modify  the  bill  materially  ;  but  passed 
it  substantially  as  it  came  to  them.  Then  the  bankers  were 
furious  and  said  they  would  rebel.  They  began  to  carry  out 
their  threat ;  and  in  a  few  hours  contracted  the  currency  18 
millions,  and  produced  a  panic  which  reduced  values  in  New 
York  City  alone  100  millions  of  dollars.  They  came  down 
to  Washington, — whole  train-loads  of  them, — filled  our  halls 
and  lobbies,  and  blackened  the  air  with  their  threats.  The 
Republican  leaders  said  they  would  filibuster  to  prevent  the 
Senate  amendments  being  considered  in  the  House  ;  and  we 
had  to  sit  there  for  a  day  and  a  half  and  vote  on  motions  to 
adjourn.  I  don't  want  any  of  you  to  understand  the  Green- 
backers  voted  for  that  bill ;  we  always  voted  against  the  bill, 


OUR  MONEY  WARS.  247 

and  against  any  issue  of  bonds  ;  but  did  all  we  could  to 
modify  the  bill.     [Applause.] 

These  bankers  also  went  up  to  the  President  (Hayes)  and 
threatened  revolution.  They  said,  "We  have  destroyed  100 
millions  of  values  already  in  New  York ;  and  we  propose  to 
withdraw  200  millions  if  necessary;  and  we  will  produce  a 
panic  such  as  was  never  heard  of."  What  did  your  President 
do  under  those  circumstances?  What  did  he  do  ?  Did  he 
call  out  the  troops  ?  Did  he  say,  "  We  will  see  whether  this 
rebellion  will  be  triumphant  or  not?"     Oh,  no! 

We  have  had  a  great  many  rebellions  in  this  country. 
There  was  one  in  Rhode  Island,  one  in  Massachusetts,  and 
another  in  Pennsylvania.  We  have  put  them  clown.  When 
a  half  million  of  men  sprang  to  arms  in  the  South,  to  over- 
throw this  republic,  a  million  men  in  the  North,  thank  God, 
rose  up  to  put  that  rebellion  down.  And  then  came  a  little 
rebellion  in  Pennsylvania.  A  few  men  at  Pittsburg  broke 
into  cars  and  stole  some  provisions  for  their  starving  families  ; 
and  in  the  riots  that  followed  two  millions  of  property  were 
destroyed.  Put  it  was  nothing  but  a  poor  man's  rebellion  ; 
and  we  sent  troops  to  put  it  clown.  But  when  the  bankers 
rebelled  in  1S81,  and  destroyed  100  millions  of  values,  what 
did  the  President  do  ?  Did  he  call  out  the  troops  to  suppress 
that  rebellion ?  Oh,  no;  he  said  "Don't!  don't!  we  will 
surrender  !  "  And  without  a  struggle,  without  a  blow,  with- 
out one  drop  of  blood,  your  country's  flag  was  hauled  clown 
in  the  mud ;  and  you  were  surrendered  into  the  hands  of  the 
bankers, — more  dangerous  foes  than  fired  on  Sumter. 


In  188 1,  Californians, — having  gotten  a  little  over  their 
speculative  fever,  and  seeing  how  they  had  kept  population 
out  and  business  down  by  fighting  paper  money,  and  nickels, 
etc.,  are  in  a  more  reasonable  frame  of  mind  generally. 


Gold  was  becoming  a  burden  in  Boston  in  1881.  The 
Clearing-house  committee  of  the  banks  held  a  meeting,  and 
voted  to  recommend  making  the  Boston  Safe  Deposit  Vaults, 
on  Milk  Street,  the  depository  for  gold  coin,  used  in  settling 
balances'  between  banks  :  Clearing-house  certificates  being 
used. 

Gould  Must  ee  Sustained. — August  20,  1SS1,  when  the 
stringency  of  the  morning,  at,  six  per  cent.,  changed  to  two 


248  OUR  MONEY  WARS. 

and  three  per  cent,  in  the  afternoon  ;  it  was  charged  that  the 
dubious  Mercantile  Trust  Co.  was  offering  ten  millions  at 
three  per  cent;  and  there  was  much  head-shaking  at  the 
statement  that  the  money  came  from  the  "  Equitable  Life  " 
to  help  Jay  Gould. 

Senator  Jones  saw  a  Great  Light. — In  an  interview  in 
the  Cincinnati  Enquirer,  on  November  n,  1881,  Senator  J.  P. 
Jones  of  Nevada,  so  noted  as  having  become  a  Greenbacker, 
though  interested  in  silver  mines,  said  : — I  came  to  the  Senate 
a  victim  or  a  convert  to  the  writings  of  the  old  financial  au- 
thorities, like  Adam  Smith,  Amasa  Walker  and  Stuart  Mill. 
It  was  after  that  that  I  became  illuminated  by  a  study  of  the 
actual  facts  of  exchange,  panic  and  currency.  I  saw  prop- 
erty reared  by  the  work  of  men's  hands, — towns,  farms,  mines, 
mills,  railroads,  all  shrink  to  be  next  to  worthless  :  while 
this  medium  of  exchange,  gold  and  silver,  began  to  mount 
up  and  up  in  value.  Whatever  made  life  interesting  was 
without  a  market,  and  that  which  had  no  use  whatever,  ex- 
cept to  be  hoarded  and  handled  by  Jews,  was  the  master  of 
the  times.  I  said  to  myself  there  is  injustice  in  this.  We 
want  a  money  that  shall  not  leave  the  country,  as  soon  as  we 
get  into  a  tight  place. 

On  another  occasion,  Senator  Jones  said  : — Gold  had  been 
set  up  as  the  sole  instrument  of  valuation,  but  the  masses  of 
this  country,  who  were  accustomed  to  doing  their  own  think- 
ing, and  did  not  rely  for  that  purpose  on  the  creditor  classes, 
either  of  the  United  States  or  England,  had  made  up  their 
minds  that,  instead  of  being  an  instrument  of  valuation,  gold 
was  an  instrument  of  confiscation  and  of  spoliation.  The 
people  of  the  United  States  could  not  prevent  the  creditor 
classes  of  England  from  robbing  and  despoiling  the  Canadian, 
the  Australian,  the  Egyptian,  the  Hindoo,  and  the  Turk,  but 
it  surpassed  his  comprehension  why  an  American  Congress 
in  1873,  or  at  any  other  time,  should  assist  the  English  creditor 
classes — and,  for  that  matter,  the  American  creditor  classes, 
also — -to  rob  and  despoil  the  debtors  among  our  own  people. 

The  single  gold  standard  men  attempted  to  brush  aside 
the  equities  involved  by  sneering  at  the  debtors.  Who  were 
the  debtors  in  this  country?  They  were  the  aspiring,  the 
hopeful,  the  energetic,  the  audacious — they  were  the  up- 
builders,  the  designers,  the  men  of  initiative,  of  executive 
power,  and  of  achievement,    They  were  the  constructive 


OUR  MONEY  WARS. 


249 


force  in  every  community.  As  probably  nine-tenths  of  the 
business  of  America  depended  in  one  form  or  another  on 
credit,  any  system  which  made  the  dollars  of  a  debt  more 
valuable  at  the  date  of  payment  than  at  the  date  of  borrow- 
ing was  a  system  of  robbery.  Machiavelli,  describing  a  cer- 
tain period  in  the  history  of  Italy,  had  said  of  it,  the  "  people 
perished,  but  the  brigands  throve." 


In  October  Folger  took  charge  of  the  Treasury  ;  and,  Gar- 
field having  been  shot,  Arthur  reigned  in  his  stead.  There 
is  fanaticism  among  silver  as  well  as  gold  men.  An  out- 
break of  it  is  seen,  at  this  time,  in  the  absurd  proposition  of 
Californians  to  Arthur  and  Folger,  to  replace  one,  two  and 
three  bank  and  Treasury  notes  by  silver. 

Silver  Certificates  Preferred  to  Gold. — Senator 
Teller,  in  his  Congress  speech  of  May  14,  1890,  said  that 
"On  September  18,  1881,  the  Secretary  of  the  Treasury  gave 
notice  that  he  would  receive  gold  for  silver  certificates.  For 
some  reason,  I  do  not  know  what,  he  revoked  that  promise 
November  1,  18S1.  And  during  that  time  $So, 000,000  of 
silver  certificates  were  exchanged  for  gold."  One  explana- 
tion of  this  the  Senator  would  have  found,  if  he  searched  the 
record,  viz..  Windom  was  Secretary  in  September,  Folger  in 
October.  Windom  then  had  more  of  the  courage  of  his  con- 
victions than  he  showed  in  1890. 

Keene  on  Gould. — It  was  apparently  about  this  time, 
that  James  R.  Keene,  the  California  speculator,  talked  in 
this  way  about  his  ups  and  downs  : — According  to  Gould's 
fables,  I  lost  some  four  millions  in  wheat;  while,  in  fact,  I 
lost  only  a  million  and  a  quarter  :  half  of  which  loss  I  re- 
covered, at  one  stroke,  in  a  speculation  in  lard  ;  and  more 
than  the  other  half  in  stocks.  Did  it  ever  occur  to  you  why 
Gould  seeks  the  malarious  banks  of  the  Hudson  ?  No  ?  Well, 
he  cannot  stand  the  pure,  bracing  air  of  the  seaside  :  it  is  too 
healthy  for  his  constitution.  He  lives  on  malaria,  and  other 
people's  misfortunes.  If  the  Government  were  to  put  him 
in  a  Florida  marsh  he  would  absorb  every  taint  of  miasma  in 
it,  so  that  not  even  an  alligator  would  be  left. 

The  St.  Louis  Republican — had  an  article  on  Novembrr 
8,  1881,  that  treats  of  the  successful  attempt  of  the  banks  to 
defeat  the  three  per  cent,  refunding  bill.  It  continues 
thus: — President    Arthur    takes    a   more  just   and  patriotic 


25° 


OUR  MONEY  WARS. 


view  of  the  subject.  Instead  of  approving  the  conduct  of 
the  hanks,  lie  exhibits  alarm  at  it,  and  recommends  that 
Congress  take  measures  to  prevent  a  repetition  of  it  in  the 
future,  by  prohibiting  the  National  banks  to  recall  their 
notes,  without  giving  due  notice  of  their  intention  to  do  so  in 
advance.  Secretary  Folger  speaks  still  more  emphatically. 
He  says  :  "  Should  many  of  the  banks  through  apprehension 
of  adverse  legislation,  or  from  any  other  cause,  desire  to  retire 
their  circulation,  the  deposit  of  such  amount  with  the 
Treasurer  might  cause  a  serious  and  sudden  contraction  of 
the  currency,  and  grave  embarrassments  in  business.  That 
the  apprehension  of  such  action  is  not  groundless,  is  shown 
by  what  took  place  on  the  passage  of  the  refunding  bill  by 
Congress  at  the  last  session."  He,  therefore,  favors  a  law 
prohibiting  the  banks  to  call  in  their  notes,  except  on  giving 
due  notice :  and  in  a  period  fixed  by  statute.  There  are  so 
many  good  reasons  for  the  legislation  recommended, — and 
the  need  of  it  is  so  apparent, — that  we  may  take  it  for  granted 
the  present  Congress  will  promptly  provide  for  it.  Not  only 
is  such  legislation  needed,  to  protect  the  country  from  bank 
intermeddling  with  public  affairs  ;  but  it  is  needed,  also,  as 
a  rebuke  to  the  amazing  executive  folly,  which  took  sides 
with  the  banks  and  against  the  country,  in  the  refunding  bill 
of  last  season. 

An  Elastic  Currency. — An  article  in  the  International 
Review  for  October,  1881,  quotes  the  testimony  of  U.  S. 
Treasurer  Gilfillan  against  the  idea  that  the  National  banks 
furnish  an  elastic  currency.  It  says  :  "  Within  his  observa- 
tion, the  National  banks  do  not  retire  any  of  their  circulation 
when  currency  is  redundant,  or  increase  their  issues  when 
there  is  a  stringency.  A  bank  which  would  retire  $90,000  of 
its  circulation  when  funds  are  in  excess,  would  receive  $100,- 
000  ;  say  in  four  per  cent,  bonds  ;  which  it  would  immedi- 
ately sell'at  $113,000  ;  and  find  itself  with  $23,000  more  than 
when  it  endeavored  to  get  rid  of  its  surplus.  Should  it  pre- 
fer to  hold  the  bonds,  without  selling,  it  might  as  well  let 
them  rest  in  the  Treasury,  and  hold  the  notes  instead,  subject 
to  any  possible  demand.  In  case  of  a  stringency,  likewise, 
the  straightened  bank  will  hesitate  before  drawing  $113,000 
from  its  available  cash  in  order  to  get  $90,000  in  its  place. 
The  interests  of  the  country  and  the  interests  of  the  banks 
work  inversely,  in  the  expansion  and  contraction  of  the  bank 
currency." 


O UR  MONE  V  IV A RS.  2 5  I 

Gold  Sticking  in  the  West. — A  new  trouble,  that  began 
now  to  worry  the  honest-money  gold-bugs,  is  thus  voiced  by 
the  N.  Y.  Tribune:  "Accumulation  of  grain  at  Chicago  and 
other  interior  points,  necessarily  involves  the  use  of  increased 
sums  of  money  ;  while  the  comparative  immobility  [.']  of  gold 
which,  when  once  paid  out  in  the  producing  regions,  seem 
to  stick  there,  most  pertinaciously, — almost  wholly  prevents 
that  return  of  money  to  the  East  which  used  to  appear  about 
Oct.  1.  If  the  grain  speculation  continues,  therefore,  still 
larger  sums  are  likely  to  be  absorbed  in  the  interior  :  while 
the  curtailment  of  exports  will  limit  our  power  to  draw  gold 
from  abroad." 

Really,  now,  how  sad.  Ask  Prof.  Sumner  what  to  do  about 
it  ! 


The  famous  "  Rigolo  "  talked  thus  in  Nov.  1881,  in  the 
N.  Y.  Sun  : — Inflation  and  overspeculation  seem  to  be  the 
order  of  the  day  all  over  the  globe;  and  people  who  now  pay 
$J0  a  share  for  stocks  like  Wabash,  St.  Louis  and  San  Fran- 
cisco, or  Missouri,  Kansas  and  Texas, — which  but  two  years 
ago  sold  at  a  dollar  a  share, — can  console  themselves  with  the 
fact  that  the  Union  Ghikrale  in  Paris  rose  from  125  to  2,350 
francs  per  share.  The  grain  speculation  seems  also  to  turn 
against  New  York.  The  "  boys  "  here  have  oversold  the 
wheat  and  corn  market :  and  have  been  squeezed  to  the  ex- 
tent of  two  or  three  cents  a  bushel.  But  most  of  them  must 
have  made  a  pile  of money  on  the  upward  track ;  and  ought 
to  be  able  to  stand  the  loss. 

Wm.  H.  Vanderbilt  Sells  his  Friends. — Here  are  two 
1S81  items  from  Wall  Street  and  conservative  journals,  that 
are  very  historical.  The  Public  said  : — We  regret  to  hear  from 
some  of  Mr.  Vanderbilt's  nearest  and  dearest  friends,  that 
he  has  lied  again.  Accusations  of  this  sort  should  not  be 
thus  lightly  and  loosely  tossed  about  the  Street.  It  is  not 
right  that  the  character  of  a  great  man,  who  owns  100  millions 
should  be  spotted  by  unfriendly  criticism  or  indecorous 
rumor.  It  is  asserted  that  Mr.  Vanderbilt  assured  his  friends 
that  the  railroad  war  was  settled  ;  and  proceeded  to  buy 
stocks.  But  if  he  did,  the  man  certainly  had  a  right  to  sell 
both  his  stocks  and  his  friends,  as  usual.  At  any  rate,  he 
has  not  settled  any  railroad  war  thus  far  ;   and  his  friends  and 


252  OUR  MONEY  WARS. 

followers  wish  that  they  had  been  the  friends  and  followers 
of  somebody  else. 

Again  , — the  New  York  Banker  and  Broker  insists  that  Mr. 
Vanderbilt  is  determined,  in  his  own  interests,  to  show  that 
his  roads  can  make  dividends  on  rates  which  would  not  pay 
new  roads.  He  has  been  convinced  that  a  check  in  railroad 
building  and  subscriptions  to  construction  companies  will 
ruin  Mr.  Gould  ;  and  next  to  his  desire  to  maintain  his  roads 
as  the  standard  of  solidity  and  regular  income,  is  his  desire 
to  break  Mr.  Gould  ;  whom  he  regards  as  a  wrecker  and  a 
parasite. 

Eighty-six  National  Banks,  with  an  aggregate  capital  of 
$9,651,056,  and  to  which  $5,233,580  in  circulating  notes 
were  issued,  were  organized  in  1881  ;  being  a  greater  number 
than  in  any  year  since  1872. 

Stocks  up  Two  Billions. — 188 1  was  truly  a  marvelous 
year  for  financial  history  :  in  fact  the  last  of  our  marvelous 
years  ;  though  others  in  the  '80s  have  been  quite  eventful. 
In  it  we  saw  the  climax  of  the  reaction  from  the  panic  and 
famine  years  in  the  '70's.  Two  thousand  millions  were  added 
to  the  nominal  values  of  stocks,  which  were  afterward  unloaded 
upon  the  "  lambs  ".  It  would  be  very  interesting,  could  one 
learn  how  many  of  the  fortunes  of  one  to  five  millions,  upon 
which  Americans  are  disporting  themselves  the  world  over, — 
were  founded  in  that  year,  by  the  smart  Alecks,  who  un- 
loaded in  time  ;  and  invested  in  real  estate  and  various  indus- 
tries. The  work  that  went  on  was  thus  described  by  the  N.  Y. 
Indicator : — The  stock  market  showed  a  capacity  equal  to  that 
of  the  Mississippi  Valley  for  taking  water  this  year.  The  fol- 
lowing graphically  describes  the  situation  :  Why  should  not 
the  cliques  in  Denver  and  Rio  Grand,  Missouri  Pacific,  Texas 
Pacific,  Western  Union  ct  id  omne  genus,  strive  hard  to 
sustain  the  stock  market ;  as  their  schemes  are  yet  incom- 
plete ?  They  have  filled  up  to  overflowing  with  watered 
stocks,  which  are  worthless  without  a  market  on  which  to 
dump  their  load.  The  crowd  sustaining  this  class  of  stuff, 
— and  incidentally  the  whole  market, — are  by  no  means 
poverty-stricken.  They  control  large  amounts  of  money 
made  in  previous  venturesvof  a  like  kind  ;  which  they  freely 
use  in  support  of  their  present  endeavor  to  flood  the  country 
with  bastard  securities.  It  remains  to  be  seen  if  a  credulous 
public  is  to  be  deluded  into  coming  to  their  relief. 


OUR  MONEY  WARS.  253 

Severe  on  Secretary  Folger. — A  Philadelphia  paper 
said,  in  December,  1S81  : — Henry  Carey  Baird  lectured  at 
Greenback  Hall  last  night,  on  "  Some  Thoughts  on  Political 
Economy  and  Social  Science."  He  said  that  the  idea  that 
there  was  no  further  need  for  Greenback  organizations  was 
a  delusion.  He  was  more  than  ever  convinced  of  this  by 
reading  the  report  of  the  new  Secretary  of  the  Treasury. 
"  Secretary  Folger,"  said  the  speaker,  "has  shown  himself  to 
be  utterly  incompetent  at  the  outset.  He  proposes  to  stop 
the  coinage  of  silver,  now  being  turned  out  at  the  rate  of 
$2,000,000  a  month ;  and  also  favors  the  retirement  of  silver 
certificates,  of  which  there  are  66  million  dollars  worth  afloat. 
Let  him  try  it  :  and  such  a  disturbance  will  be  created  that 
he  will  be  driven  from  his  office  in  48  hours."  Mr.  Baird 
then  proceeded  to  argue  for  the  necessity  for  the  issuance 
of  more  money  by  the  Government. 

1882. 

Jesuitical  Nonsense. — Although  the  financial  excitement 
was  miider  in  1882,  there  was  much  hot  discussion.  Here 
is  an  item  from  the  N.  Y.  Sun,  which  is  Jesuitical  nonsense; 
inasmuch  as  it  ignores  the  labor  cost  of  gold  and  the  interest 
on  its  intrinsic  value,  and  the  larger  denominations  of  notes: 
"  The  relative  cost,  in  wear  and  tear  of  gold  coin,  as  compared 
with  bank  notes,  has  lately  been  investigated  in  England  ; 
and  the  advantage  has  been  found  to  be  largely  with  the 
coin.  To  manufacture  a  million  of  sovereigns  costs  $10,000  , 
or  about  a  cent  apiece.  In  fifteen  years  they  lose  in  weight 
one-half  of  one  per  cent.,  or  about  $25,000.  This  makes 
their  total  expense,  as  currency,  for  the  fifteen  years,  $35,000. 
The  paper  and  printing  of  a  million  one-pound  notes  would 
cost,  it  is  estimated,  four  cents  apiece,  or  $40,000  at  the  out- 
set ;  and  during  fifteen  years  they  would  have  to  be  replaced  at 
least  three  times,  or,  with  active  use,  six  times  :  thus  requir- 
ing an  outlay  of  $160,000,  and  perhaps  $280,000,  for  the  same 
period  that  a  million  sovereigns  would  remain  in  circulation." 

One  piece  of  Jesuitism  in  the  above  is,  the  ignoring  the  fact 
that  a  ten-thousand-pound  bank-note  costs  no  more  to  print 
than  a  one-pound  note.  Again  there  is  no  such  expense  in 
printing  bills  here  as  in  England  ;  and  no  such  fool  way  of  de- 
stroying them,  and  reissuing  them  when  they  return  to  their 
source,  as  occurs  with  Bank  of  England  notes.  With  such 
rubbish  do  the  gold-bugs  retain  their  hold  upon  simpletons. 


254  OUR  MONEY  WARS. 

In  1882,  the  famous  Prof.  Soetbeer  wrote  an  article  upon, 

The  Gold  Drainage  from  Europe  to  America. — He 
thought  that  it  would  last  for  some  time  ;  but  that  no  evil 
result  need  be  apprehended  ;  "  that  the  American  banks  will 
tire  of  having  so  much  gold  ;  and  that  the  American  people 
will  show  their  old  preference  for  paper  money.''     \\ "ise  man  ! 

F.  13.  Thurber  and  his  Anti-Monopolists — were  largely 
with  us  in  the  fight  for  Government  paper  money  in  the 
early  '80s.  Here  are  some  of  his  utterances  upon  railroad 
monopoly  when  he  was  fighting  Vanderbilt,  Depew  and  Co : 
— We  believe  that  these  encroachments  were  never  contem- 
plated by  our  forefathers,  who  rebelled  against  unjust  tax- 
ation, and  threw  the  tea  into  Boston  Harbor,  upon  which  it 
was  sought  to  levy  taxes.  We  believe  that  the  men  who 
abolished  primogeniture  and  entail — in  order  to  ensure  the 
more  equal  distribution  of  wealth — would  not  justify  a  sys- 
tem of  freebooting  under  the  guise  of  law,  which  places  the 
production  and  commerce  of  a  continent  at  the  mercy  of  a 
few  men,  who  recognize  no  principle  of  action  but  personal 
or  corporate  aggrandizement. 

Again  :  Unless  charges  for  transportation  are  based  upon 
cost  of  service,  and  regulated  by  law,  the  railroads  are  virtually 
owners  of  the  country.  Indeed  it  is  more  advantageous  to 
the  railroad  managers  than  if  they  had  a  proprietary  interest 
in  all  property  :  for  with  charges  for  transportation  based 
upon  the  principle  of  "what  the  traffic  will  bear  " — and  the 
railroad  managers  sole  judges  of  that  question, — they  can  tax 
production  and  commerce  at  will,  without  the  trouble  or  re- 
sponsibility of  ownership. — Report  of  N.  V.  Board  of  Trade. 

Interest  Coming  Down*. — Matthew  Marshall,  the  con- 
servative old  gent  who  took  the  place  of  the  late  lively 
"  Rigolo  ",  in  writing  the  Monday  finance  articles  in  the  N.  Y. 
Sun,  had  this  in  1890  : — As  we  know,  the  fives  and  sixes  thus 
extended  at  3^  per  cent  by  Secretary  Windom  [in  1881] 
were  converted  in  1882  into  3  per  cent,  bonds,  payable  at 
the  pleasure  of  the  Government.  And  it  is  worthy  of  note 
that  the  same  bank  officers  who,  in  February,  1S81,  were 
ready  to  ruin  the  business  of  the  country,  rather  than  accept 
at  par  a  3  per  cent,  bond, — having  five  years  to  run, — abso- 
lutely sent  their  clerks  August  i,  1882,  to  stand  in  line  at 
the  Post  Office,  to  get  in  the  earliest  application  for  3  per 
cent,  bonds  ;  which  could  be  paid  off  at  any  time  ;  and  which 


OUR  MONEY  WARS.  255 

were,    in  fact,   paid  off    in   part   within   a  year;     and  were 
finally  extinguished  in  less  than  five  years. 

Knox  Knocked  Out. — It  was  in  18S2  that  the  South  Bend 
Era  thus  exposed  T.  J.  Knox  : — General  J.  B.  Weaver's  expo- 
sition of  the  clause  in  the  National  Bank  law  granting  90  per 
cent  of  the  current  market  value  of  the  bonds,  alarmed  the 
philanthropic  gentlemen  engaged  in  the  banking  business ; 
and  brought  from  them  an  instant  denial,  supported  by  the 
testimony  of  John  J.  Knox,  Comptroller  of  the  Currency. 

No  sooner  was  the  denial  uttered  than  General  Weaver 
and  the  Greenbackers  confronted  the  bankers  and  the  Comp- 
troller with  the  plain  words  of  the  statutes.  The  law  was  as 
distinctly  in  favor  of  the  Greenbackers'  position  as  the  Eng- 
lish language  could  make  it.  This  was  a  point  clearly  scored 
for  the  new  party. 

After  being  convicted  of  garbling  the  law,  and  attempting 
to  deceive  his  countrymen,  Comptroller  Knox  is  driven  to 
admit  that  the  law  does  grant  to  the  banks  90  per  cent,  of 
the  current  market  value  of  the  bonds,  but  claims  that  he 
and  another  inferior  officer  had  an  informal  consultation 
some  years  ago  ;■  and  decided  to  place  a  different  construc- 
tion on  the  law ;  so  that  banks,  at  present,  can  only  receive 
90  per  cent,  of  the  par  value  of  the  bonds,  in  bank  notes. 

Knowing  that  Comptroller  Knox  falsified  in  one  instance, 
— in  defence  of  the  banks, — we  received  his  new  statement 
with  some  doubt ;  and  at  once  proceeded  to  investigate  as  to 
the  correctness  of  it.  And  what  do  we  find  ?  We  find  that 
only  a  few  months  ago  Comptroller  Knox  furnished  to  the 
Bankers'  Magazine  the  following  statement : 

Washington,  D.  C,  January  1,  1882. — The  Treasury  holds 
the  following  bonds  to  secure  bank  circulation  : 

Currency  6's $3,536,000 

5    per  cents 144,000 

4/^   "       "      32,ll7<5°° 

-  4       "       "       93,190,000 

zYz  "     "     243,262,500 

Total.. $372,250,150 

Total  circulation  outstanding  cur- 
rency notes 362,792,292 

A  moment's  use  of  the  pencil  demonstrates  that  90  per 
cent  of  the  par  value  of  $372,250,150  of  bonds  is  just  $335,- 


256  OUR  MONEY  WARS. 

025,135  ,  whereas,  according  to  the  testimony  of  Comptroller 
Knox  himself,  the  circulation  issued  to  the  banks  on  these 
bonds  is  $362,792,292,  or  $27,767,157  more  than  90  percent, 
of  the  par  value  of  the  bonds. 

Convicted  of  falsehood  and  deception, — first  by  the  law 
under  which  he  holds  his  office,  and  now  by  the  logic  of  his 
own  official  statistics, — Comptroller  Knox  stands  before  the 
country  as  the  contemptible  lackey  of  X\\z  National  banks; 
while  the  Greenback  party  has  proven  anew  the  correctness 
of  its  position  on  this  point  of  the  financial  question. 

But  all  that  does  not  prevent  Knox  from  being  president 
of  a  New  York  National  bank  at  this  writing,  in  1891  ;  and 
continuing  to  vent  owl-like  wisdom  as  such. 


In  1882,  Judge  Warwick  Martin  printed  his  "  Financial 
History  of  the  Democratic  Party" — a  very  strong  work; 
showing  that  all  the  first  leaders  of  the  party  were  prac- 
tically Greenbackers ;  and  that  Belmont,  Tilden,  Hewitt 
and  English  have  entirely  repudiated  Jeffersonian  Democ- 
racy. 

On  July  12,  1882,  the  Bank  Charter  Bill  was 
Passed.  Section  13  provided  that  "  any  officer,  clerk  or  agent 
of  any  National  banking  association  who  shall  wilfully  violate 
the  provisions  of  an  Act  entitled  '  An  Act  in  reference  to 
certifying  checks  by  National  banks,'  approved  March  3, 
1869;  or  who  shall  resort  to  any  device,  or  receive  fictitious 
obligations,  direct  or  collateral,  in  order  to  evade  the  provi- 
sions thereof,  or  who  shall  certify  checks  before  the  '  amount 
thereof  shall  have  been  regularly  entered  to  the  credit  of  the 
dealer  upon  the  books  of  the  banking  association, — shall  be 
deemed  guilty  of  a  misdeameanor,"  etc.  There  was  a  fine  of 
not  more  than  $5,000,  or  imprisonment  not  more  than  five 
years. 

The  bankers  smiled  at  this ;  and  simply  "  accepted " 
checks  instead  of  certifying  them  ;  and  everything  was  lovely 
again.  Not  one  of  them  even  went  to  jail,  to  say  nothing 
of  the  $5,000. 


On  that  same  July  12,  1882,  John  Sherman  worked  another 
of  his  cunning  tricks  and  deep-laid  schemes  in  getting  this 
seeming  innocent  proviso  passed  relative  to  the   deposit  of 


OUR  MONEY  WARS.  257 

gold  coin  in  the  Treasury,  and  the  issue  of  coin  certificates 
therefor.  Here  is  the  gem,  with  comments  by  P.  Prentiss, 
of  Cleveland,  O  : 

"  Provided,  That  the  Secretary  of  the  Treasury  shall  sus- 
pend the  issue  of  such  gold  certificates  whenever  the  amount 
of  gold  coin  and  gold  bullion  in  the  Treasury,  reserved  for  the 
redemption  of  United  States  Notes,  falls  below    $100,000,000." 

Notice  carefully  the  above  words  in  italicsffor  they  are 
the  ones  that  Sherman  says  authorizes  the  Secretary  to  main- 
tain, as  a  reserve  for  redemption  purposes,  a  minimum  amount 
of  $100,000,000  in  gold.  The  act  speaks  of  the  "  reserve" 
as  though  it  was  a  thing  already  established  by  law,  and  there 
is  where  the  craftiness  comes  in,  for  it  never  was  established 
by  law  at  all.  It  is  solely  and  entirely  a  scheme  gotten  up 
by  our  gold-bug  Secretaries  of  their  own  volition,  and  main- 
tained by  every  one  of  them — the  Democrats  as  well  as  Re- 
publicans— to  this  hour. 

The  law  does  not  authorize  or  require  any  reserve  of  gold, 
silver  or  anything  else  to  be  established  or  maintained  for 
$100,000,000  or  any  other  amount.  It  simply  says  nothing 
about  it.  But  it  does  require  him  to  redeem  the  Greenbacks 
in  coin  and  authorized  him  to  sell  bonds  for  coin  for  that 
purpose. 

The  words,  "  reserved  for  the  redemption  of  United  States 
notes,"  so  interloped  into  the  said  Act  of  July  12,  1SS2,  were 
cunningly  devised  and  put  in  for  the  purpose  of  making  a 
show  of  a  base  and  support  for  their  claims  of  a  $100,000,000 
gold  reserve — as  being  established  by  law  ;  and  John  Sher- 
man is  now  putting  it  to  that  use,  as  intended  from  the  be- 
ginning. The  Secretary  institutes  the  "  reserve  "  on  his  own 
motion  and  order,  without  authority  of  law,  and  the  next 
step  of  the  conspirators  is  to  refer  to  it  in  the  Act  of  1882  as 
though  it  had  been  established  by  law.  And  the  next  'and 
last  step  is  to  now  refer  to  the  Act  of  1882  as  "  an  act  author- 
izing the  Secretary  to  maintain  a  minimum  reserve  of  $100- 
000,000  in  gold."  How  is  that  for  a  scheme  by  honest  (?) 
men  for  honest  (?)  money  ?  But  further,  he  is  only  authorized 
to  sell  bonds  for  coin,  "  to  the  extent  necessary,"  to  redeem 
the  greenbacks  in  coin — for  that  purpose  and  no  other — to 
that  extent  and  no  further. 

But  the  Secretary  is  using  the  gold  reserve  to  redeem 
Treasury  notes  issued  under  the  Sherman  Act  of  1890,  which 
*7 


258  OUR  MONEY  WARS. 

Treasury  notes  the  law  says  he  shall  redeem  in  gold  or  silver 
coin,  at  his  discretion,  and  that  he  shall  coin,  of  the  silver 
bullion  purchased  under  the  act,  as  much  as  may  be  neces- 
sary to  redeem  the  Treasury  notes  issued  under  said  act. 

Does  the  law  command  him  to  coin  the  silver  bullion  as 
may  be  necessary  to  redeem  them  and,  at  the  same  time, 
authorize  him  to  sell  bonds  for  gold  coin  with  which  to 
redeem  everyone  of  them  ?  Certainly  not !  But  that  is  just 
what  he  is  doing  or  says  he  will  do  if  necessary. 

Who  wants  the  bonds  ?  The  national  banks,  to  enable 
them  to  issue  more  of  their  notes  as  money,  and  draw  interest 
on  the  bonds  at  the  same  time. 

Who  wants  the  gold  coin  ?  De  Rothschilds  &  Co.,  to  put 
poor,  poverty-struck  Austria- Hungary  on  the  gold  standard, 
and  so  make  lower  prices  and  lower  wages  for  the  producers 
and  higher  money  for  the  Shylocks. 

Then  the  Secretary  must  pay  out,  in  the  usual  course  of 
business,  the  Greenbacks  and  notes  so  redeemed,  which 
must  again  be  redeemed  on  presentation,  and  so,  round  and 
round,  ad  infinitum;  and  the  amount  of  gold  coin  that  could 
be  demanded  of  the  Treasury  would  be  unlimited. 

[France  redeems  her  "  coin  "  obligation  in  silver  or  gold, 
choosing  the  metal  she  has  most  of. — S.  L.] 

Henry  Appleton  (Honorius)  had  this  in  the  Irish  World 
in  1882  : — And  then,  just  think  of  the  big  boss  food-thieves  ; 
compared  with  whom,  your  family  grocer  is  but  an  innocent 
babe.  According  to  the  official  statistics,  the  corn  crop  in 
1881,  was  sold  four  times  through  speculative  purchases; 
the  wheat  crop  ten  times,  and  the  cotton  crop  172  times.  In 
cotton  the  speculative  trading  amounted  to  $1,729,000,000, 
in  wheat  $600,000,000,  and  in  corn  $133,000,000.  The  state- 
ment is  unblushingly  going  the  rounds  in  the  prominent  news 
and  commercial  papers,  that  the  price  of  the  necessities  of 
life  has  been  enhanced,  on  an  average,  50  per  cent,  higher 
than  what  a  normal  profit  would  warrant.  Yes,  the  world 
stands  amazed  when  it  is  stated  that  12  men  own  one-half  of 
Scotland,  while  a  few  hundreds   own  four-fifths  of  Ireland. 

But  right  here  in  free  America,  12  men,  to-day,  dictate 
that  a  poor  working  man  shall  pay  20  cents  for  a  pound  of 
meat  that  would  furnish  a  handsome  profit  at  ten  cents ;  and 
are  standing  despotic  guard  over  the  stomachs  and  backs  of 
fifty  million  of  free  men. 


CUR  MONEY  WARS.  259 

Bank  Profits. — Banks  usually  try  to  conceal  their  profits. 
But  in  the  Saratoga  Bankers'  Convention  of  18S2,  Mr.  A.  D. 
Lynch,  of  Indiana,  gave  a  paper  on  "  Banking  in  the  West," 
containing  this:  '  The  profits  of  National  banking  in  the 
middle  Western  States  cannot  be  said  at  this  time  to  be  ex- 
travagant, though  satisfactory.  The  time  has  been,  within 
the  last  20  years,  when  the  semi-annual  dividends  of  the 
banks  of  the  States  named  have  been  such  <is  I  >  ,'/  we  satisfied 
even  that  voracious  old  usurer  who  demanded  the  pound  of  flesh. 
For  the  close  of  the  year  1SS1,  the  reports  of  these  States 
spoken  of,  as  shown  in  tables  made  by  the  comptroller  of  the 
currency,  evince  that  the  dividends  to  capital  were  S'j  per 
cent;  and  earnings  to  capital  and  surplus  were  9  1-10  per  cent. 

"  This  is  the  average  ;  while  in  individual  instances  we  still 
find  the  old  8  and  9  per  cent,  semi-annual  dividend ;  where 
the  capital  has  been  thrice  paid  back  to  the  shareholders  in 
dividends  in  the  past  20  years  ;  all  costs  and  losses  properly 
charged  out.  This  will  represent  about  700  National  banks  ; 
with  capital  of  $175,000,000  and  deposits  at  least  $000,000,- 
000.'' 

1883. 

Trade  Dollars  in  Siam. — During  the  Trade-Dollar 
excitement,  this  came  from  Siam : — The  King  is  buy- 
ing American  trade-dollars,  at  about  90  cents  on  the  dollar, 
and  coining  new  Siamese  ticols.  The  new  coin  is  very 
handsome  and  much  sought  after  by  the  native  traders. 
These  ticols  piss  current  for  60  cents  within  the  kingdom: 
but  at  Singapore,  Senang  and  Calcutta  they  are  accepted  at 
a  discount  of  20  per  cent.,  so  that  their  actual  value  is  not 
more  than  48  cents.  It  is  said  at  the  British  Consulate,  that 
one  trade-dollar  produces  two  ticols ;  so  it  will  be  seen  that 
the  Siamese  Government  is  doing  a  profitable  business  by 
debasing  the  coin. 

The  Water  and  Gas  Gone. — By  1S83,  the  gas  and  water 
had  gone  out  of  so  many  American  enterprises,  that  had  been 
unloaded  upon  the  "  lambs  ", — that  our  fellow  "  skins  "  of 
Europe  began  to  give  us  the  cold  shoulder.  Rigolo  said, 
in  his  Monday  article,  in  the  N.  Y.  Sun  : — Business  men, 
returning  from  Europe,  say  that  the  moment  an  American 
comes  to  any  broker's  or  banker's  office  in  London  and  Paris, 
— -and  attempts  to  talk  business, — -everybody  runs  away. 
They   are    willing   to   meet  well-introduced    and    polished 


260  OUR  MONEY  WARS. 

Americans  on  social  terms, — as  they  are  willing  to  marry 
handsome  American  girls, — but  they  won't  have  anything  to 
do  with  any  kind  of  American  securities. 

The  "  Seney  Crowd's"  High  Kicking. — In  1883  came 
the  high-kicking  of  the  "  Seney  Crowd  ",  which  is  thus  de- 
scribed in  the  N.  Y.   Times  ■ — 

How  Securities  are  Piled  up  and  Marketed  by  Christian 
Financiers  : — The  well-known  and  philanthropic  banker,  Mr. 
Seney,  is  the  recognized  head  of  a  group  of  financiers  and 
railroad  constructors  which  Wall  Street  has  dubbed  "  The 
Seney  Crowd."  The  crowd,  as  a  collective  substantive, 
exists  for  the  purpose  of  issuing  securities.  This  is  the  func- 
tion of  its  being.  It  has  introduced  "  the  Seney  method," 
of  railroad  financiering, — -the  like  of  which  was  never  seen  in 
Wall  Street  before,  and  it  is  to  be  hoped,  will  never  again  be 
seen.  The  reasoning  on  which  the  method  is  based  is  simple 
— plenty  of  securities,  and  if  you  make  them  cheap  enough 
the  people  will  buy  ;  they  won't  buy  1,000,000  at  50,  but 
give  them  50,000,000  at  10  and  they  will  take  the  lot.  Had 
the  "Seney  Crowd"  acquired  the  New  Orleans  line  they 
would  first  have  formed  a  syndicate  among  themselves,  and 
bought  up  the  property  for  cash  at  the  lowest  price  obtainable. 
They  would  then  have  made  some  necessary  repairs,  got 
some  equipments  on  car  trusts,  and  made  a  traffic  agree- 
ment with  the  road  it  was  intended  to  work  with.  Having 
thus  put  things  into  shape,  the  members  of  the  syndicate 
would  organize  themselves  into  a  railroad  company,  with  a 
high-sounding  name  ;  and  proceed  to  divide  the  profits.  The 
printing  press  would  go  to  work  with  energy.  First  mortgage 
bonds,  second  mortgage  bonds,  terminal  bonds,  consolidated 
bonds,  income  bonds,  preferred  stock  certificates,  and  com- 
mon stock  certificates,  would  be  rolled  off  by  the  ream.  First 
mortgage  bonds  would  be  issued  in  amount  nearly  enough  to 
cover  the  cost  of  the  property  ;  of  second  mortgage  bonds 
there  would  be  issued  as  much  ;  consolidated  bonds  to  cover 
mortgages  already  resting  on  the  road  ;  income  bonds  and 
common  and  preferred  stock  ad  lib.  The  terminal  bonds 
would  cover  the  terminal  property ;  the  argument  of  the 
Seney  financiers  being  that  terminals  are  really  real  estate, 
not  railroads ;  and  real  estate  always  has  its  value,  and 
should  be  covered  by  a  real  estate  bond.  Equipment,  also, 
is   not   road,    so   that   must   be    got   on   car   trusts.     First 


OUR  MONEY  WARS.  261 

mortgage  six  per  cent,  bonds  may  be  held  at  90,  and  the  ter- 
minal bonds  also  ;  the  seconds  may  bring  75  ;  income  bonds, 
40  ;  the  preferred  stock  may  be  sold  for  25  ;  and  anything 
over  10  for  the  common  is  unexpected  gain.  Having 
worked  off  these  alleged  securities  on  the  public  ;  the 
"  Seney  Crowd  "  would  leave  them  to  be  kicked  about  Wall 
Street,  for  an)-  price  they  could  fetch. 

Recently  the  East  Tennessee  company  (which  is  theirs) 
held  a  meeting  ;  and  authorized  the  issue  of  an  additional 
$10,000,000  of  bonds  ;  $3,000,000  of  preferred  stock,  and 
$13,000,000  of  common  stock, — the  bonds  to  be  issued  only 
on  newly-acquired  property.  The  trifle  of  $16,000,000  of 
stock  will  be  loaded  on  to  it  in  addition.  As  the  East  Ten- 
nessee company  has  only  $83,000,000  of  securities  now  out- 
standing (exclusive  of  car  trusts),  the  new  issue  will  bring 
.its  obligations  up  to  the  respectable  figure  of  $109,000,000. 
This  is  in  the  true  Seney  style. 

[But  the  Seney  Crowd  could  not  long  emulate  Gould, — who 
is  his  own  crowd  ;  and  great  was  the  fall  thereof. — S.  L.] 

Here  is  another  version,  from  Henry  Clews'  book.  Henry's 
stomach  is  not  easily  turned  ;  but  he  draws  the  line  at  Seney 
and  Eno  ;  he  thinks  them  "  crooked  ", — in  fact,  "  not  respect- 
able." After  showing  that  Seney  helped  to  bring  on  the 
panic  of  1S84,  he  gives  particulars  : — 

Seney  was  a  great  patron  of  churches  and  religious  insti- 
tutions. He  was  probably  the  most  eminently  respectable 
financier  in  Wall  Street ;  where  he  carved  out  an  original 
course  for  himself  in  speculation — so  original,  in  fact,  as  to 
stamp  a  number  of  enterprises  with  his  name.  The  Seney 
properties  became  almost  as  familiar  to  the  financial  world 
as  the  Goulds,  the  Vanderbilts,  and  the  Villards. 

Mr.  Seney's  chief  securities  (so  called  through  the  courtesy 
of  speculative  parlance)  were  Ohio  Central,  Rochester  and 
Pittsburgh,  East  Tennessee,  Virginia  and  Georgia,  and  the 
celebrated  "  Nickel  Plate  "  Road.  These  were  known  as  the 
Seney  Syndicate  properties,  and  the  system  of  handling  them 
was  entirely  novel  in  the  history  of  Wall  Street ;  causing  the 
financial  veterans  of  Wall  Street  to  stand  and  stare  at  the 
boldness  and  rapidity  of  the  Seney  movements. 

Instead  of  starting  with  moderate  issues  in  amount, — as 
has  usually  been  the  custom  of  most  men  handling  railroad 
and   telegraph  properties, — and  doing   the  watering  process 


262  OUR  MONEY  WARS. 

by  degrees,  Mr.  Seney  boldly  began  the  watering  at  the  very 
inception  of  the  enterprise  ;  pouring  it  in  lavishly  and  with- 
out stint.  There  was  nothing  mean  or  niggardly  about  his 
method  of  free  dilution  ;  the  sight  of  which  threw  some  of 
the  old  operators  into  a  fit  of  consternation.  The  stocks 
were  strongly  puffed  ;  and  as  they  were  so  thoroughly  diluted, 
their  owners  could  afford  to  let  them  get  a  start  at  a  very  low 
figure.  The  future  prospects  of  the  properties  were  set  forth 
in  the  most  glowing  colors  ;  the  public  took  the  bait,  and  the 
stocks  became  at  once  conspicuous  among  the  leading  active 
fancies  of  the  market. 

The  cause  of  the  vigorous  life  and  amazing  activity  so 
suddenly  imparted  to  the  stocks  of  the  Seney  Syndicate,  can 
only  be  revealed  by  a  careful  perusal  of  Mr.  Seney's  check- 
book ;  which,  if  still  in  existence,  will  show  commissions  paid 
for  the  execution  of  the  orders  to  buy  and  the  orders  ex- 
ecuted to  sell, — both  by  the  same  pen  and  in  the  same  hand- 
writing. 

These  transactions,  in  the  language  of  the  "  Street ",  are 
called  washed  sales.  In  this  way,  Mr.  Seney  was  understood 
to  have  made  a  very  large  amount  of  money  ;  and  from  being 
almost  one  of  the  poorest  men  in  Brooklyn,  he  soon  became 
marked  as  the  richest.  While  he  continued  to  thrive,  it  was 
a  singular  fact  that  the  majority  of  his  financial  friends 
seemed  to  fall  into  a  decline. 

When  the  affairs  of  the  Seney  enterprise  were  wound  up, 
it  was  discovered  that  these  people  had  little  left,  except  the 
certificates  which  bore  the  high-sounding  term  of  the  Seney 
Syndicate  Property. 

One  peculiarity  about  Mr.  Seney,  in  his  social  relations, 
was,  that  while  he  appeared  almost  bereft  of  sympathy  for 
used-up  friends, — whom  his  schemes  had  ruined, — he  drew 
largely  on  his  immense  gains  for  philanthropic  purposes  ; 
and,  in  the  aggregate,  must  have  distributed  over  two  million 
dollars  in  a  very  magnanimous  manner. 

"  It  would  seem,"  adds  Mr.  Clews,  "  that  Mr.  Seney  at 
one  time  aspired  to  be  a  great  philanthropist ;  and  had  it  not 
been  for  the  expose  which  was  the  result  of  the  panic  ;  he 
might  one  day  have  stood  in  as  high  and  lordly  a  position  as 
the  renowned  Peabody, — -with  even  a  greater  reputation  as  a 
financier.  It  is  sad  to  picture  the  contrast  presented  by  the 
denouement,  with  what  might  have  been,  in  a  career  which 


OUR  MONEY  WARS.  263 

began  with  so  much  promise  ;  dating  from  the  time  that  Mr. 
Seney  was  installed  as  president  of  the  Metropolitan  Bank,— 
whose  standing  and  credit  were  the  highest  in  the  State. 
Mr.  Seney's  speculative  career  affords  an  example  of  the 
way  in  which  this  kind  of  speculation  reflects  on  the  stability 
of  our  best  banking  institutions.  The  lesson  is  one  that 
should  be  carefully  taken  to  heart,  by  the  financiers  of  this 
country." 

After  these  moral  reflections,  Mr.  Clews  proceeds  to  sketch 
the  career  of  another  estimable  financier, — Mr.  J.  C.  Eno,  the 
former  president  of  the  Second  National  Bank. 

Most  of  the  money  lent  by  that  bank  was  upon  collateral 
securities ;  which, — for  convenience  as  well  as  for  safety, — 
were  kept,  not  at  the  bank,  which  was  situated  under  the 
Fifth  Avenue  Hotel,  but  in  a  vault  down  town. 
■  The  capital  stock  of  the  bank  was  $100,000;  and  it  had 
$4,000,000  of  deposits  ;  all  of  which  was  appropriated  to 
speculative  use  by  this  smart  young  man  ;  who  decamped  to 
Canada  in  company  with  a  Roman  Catholic  priest. 

Instead  of  loaning  the  money  to  Wall  Street  brokers, — as 
he  represented  to  the  directors, — he  placed  it  as  margin  with 
his  own  brokers,  in  various  speculative  ventures  ;  and  in  that 
manner  he  made  away  with  the  entire  $4,000,000  of  the 
bank's  deposits,  without  exciting  the  least  suspicion  in  the 
confiding  breasts  of  the  directors. 

"  Such  another  instance,"  says  Mr.  Clews,  "  of  a  clean 
sweep  of  the  deposits  of  a  bank,  by  any  of  its  officials,  is 
probably  not  on  record,  in  the  whole  history  of  this  kind  of 
manipulation." 

But  Mr.  Clews  makes  a  curious  omission.  Who  were  the 
brokers  that  received  Eno's  stolen  money  ?  Did  they  kno\v 
it  to  be  stolen  ?  If  they  did,  were  they  not  as  culpable  as  the 
thief  ? 

A  somewhat  celebrated  case  is  now  [1S90]  before  the  New 
York  courts.  It  is  that  of  E110  r'j-.  Seymour,  Baker  &  Co. 
In  bringing  this  suit,  Mr.  Eno  alleges  that  the  frauds  of  Sey- 
mour and  Baker,  the  brokers  who  transacted  his  business, 
were  the  cause  of  his  ruin. 

Were  'these  brokers  exceptional,  Mr.  Clews  ?  Would  many 
firms  in  Wall  Street  have  rejected  the  business  which  Eno 
brought  them?  Did  Eno  have  to  go  far  afield  before  he 
found  two  men  of  his  own  kidney  ? 


264  OUR  MONEY  WARS. 

Eno  swindled  his  depositors.  His  brokers  swindled  Eno. 
Is  the  case  so  unusual  ? 

Vanderbilt  Gets  Palaces  and  Respectability. — Wm. 
1  f.  Vanderbilt  was  in  high  feather  in  1883.  In  that  year,  he 
built  his  Fifth  Avenue  palaces  ;  and  had  the  great  masquerade 
ball,  at  which  Abram  S.  Hewitt  appeared  as  "  King  Lear 
before  he  was  crazy."  This  was  the  first  step  toward  "  com- 
plete respectability,"  on  the  part  of  the  Vanderbilts.  It  was  a 
success.  Their  sins  are  already  forgotten  by  most  people  ; 
and  only  the  virtues  of  their  bank  accounts  are  remembered. 
But  we,  who  don't  forget,  will  take  a  few  peeps  at  them.  Here 
is  a  spring  item  of  interest,  about  this  royal  personage. 

The  Wall  Street  News  of  New  York  says:  "  W.  H.  Van- 
derbilt's  check  for  April  interest,  on  Government  fours,  was 
$402,000;  or  interest  on  $40,200,000  of  bonds."  This  is 
quarterly  interest.  So  our  Lord  Vanderbilt  practically  re- 
ceives an  annual  pension  from  the  people, — for  no  service 
whatever, — of  $1,608,000.  We  say  no  service.  What  has  he 
done  for  us  ?  He  has  exchanged  our  non-interest-bearing 
notes  for  our  interest-bearing  notes.  In  other  words,  with 
unlimited  power  to  issue  all  the  non-interest-bearing  notes 
we  need,  we  have,  instead,  to  form  an  excuse  for  supporting 
our  rich  loafers,  issued  interest  notes,  and  then  made  an  even 
exchange.  We  cannot  blame  Vanderbilt.  We  have  offered 
him  a  million  cows  that  give  milk,  for  a  million  cows  that 
don't  give  milk  ;  and  he  has  accepted  our  offer, — upon  con- 
dition that  we  shall  shelter  and  feed  them. — Indianapolis 
Globe. 

And  here  is  a  summer  item,  from  cynical  Rigolo  of  N.  Y. 
Sun  : — 

It  looks  as  if  business  would  be  uncommonly  dull  in  Wall 
Street,  all  through  the  summer.  Mr.  Vanderbilt  has  returned 
from  Europe ;  but  he  ignores  the  Street,  drives  Maud  S., 
and  concentrates  all  his  energies  upon  beating  Frank  Work's 
team.  He  even  refuses  to  go  to  Saratoga  ;  and  the  stock- 
brokers, who  have  summer  offices  there  are  in  the  depths  of 
woe  ;  as  there  will  be  no  one  on  the  piazza  of  the  United  States 
to  give  valuable  friendly  points.  For  several  years  past, 
Mr.  Vanderbilt  has  divided  with  the  congress  water  and  the 
roulette  and  faro  tables,  the  honor  of  being  one  of  the  main 
attractions  to  the  Springs ;  and  it  will  be  highly  interesting 
to   watch   his   old   torpid-liver  chums,    who  will  now  be   de- 


OUR  MONEY  WARS.  265 

prived  of  their  only  intellectual  and  conversational  resources, 
— the  repeating  of  what  "  Bill"  says  about  stocks,  Maud  S., 
Frank  Work  and  the  "  common  people  "  ;  who  take  the  liberty 
of  criticising  anything  with  which  Vanderbilt's  name  is  con- 
nected. 

The  original  Vanderbilt  had  "  wanted  the  earth,"  and  felt 
that  he  had  it.  The  brutal  ways  of  the  old  commodore  are 
thus  described  : — The  despotic  will  of  the  old  sailor, — disre- 
garding everything  except  his  personal  comfort  and  aims, — is 
still  on  the  surface.  Speaking  a  short  time  ago  on  the  subject 
of  "rapid  transit  ",  he  said  in  the  rudest  tune  it  was  ever  my 
lot  to  listen  to  :  "I  will  have  nothing  more  to  do  with  it ; 
and  I  don't  care  what  New  York  wants  !  I  was  willing  once 
to  give  rapid  transit  to  the  city  I  have  met  opposition,  and 
there  is  an  end  of  it  !  And  no  member  of  my  family  shall 
ever  have  a  hand  in  it,  as  long  as  I  live." 

This  was  in  Democratic  America.  And  the  old  highway 
robber  died  unpunished,  and,  in  fact,  in  the  odor  of  sanctity. 
Is  it  any  wonder  that  the  Democratic  Republic  is  practically 
dead  ? 

Thurber  on  the  Lard  Failures. — Here  is  plain  talk 
from  F.  B.  Thurber's  Anti-Monopoly  Justice,  on  the  "  Lard 
Failures  "  in  1883  : — A  Chicago  press  dispatch  says  :  "  Every 
creditor  of  the  late  suspended  firm  of  McGeoch,  Everingham 
&  Co., — who  failed  for  $6,000,000, — has,  it  is  said,  signed  the 
50  per  cent,  compromise  ;  and  the  $450,000  cash  to  pay  un- 
secured creditors  is  to  be  sent  here  Tuesday.  It  is  expected 
that  the  firm  will  be  reorganized,  and  resume  business  in 
about  a  month.  Its  commission  business,  before  the  failure, 
was  worth  $300,000  a  year."  When  one  firm  makes  $300,000 
per  year  in  commission,  it  shows  what  a  nation  of  gamblers 
we  have  become.  The  above  firm  had  no  legitimate  busi- 
ness; they  were  simply  speculative  gamblers — public  ene- 
mies ;  who  ought  to  be  drummed  out  of  town  to  the  tune  of 
"  The  Rogues'  March  ; "  And  yet,  very  likely,  they  stand 
high  in  the  Church  ;  and  contribute  as  regularly  to  its  reve- 
nues as  do  the  pious  Sicilian  brigands.  The  only  way  to 
reach  commercial  gamblers,  who  manufacture  and  trade  upon 
false  reports  (as  gamblers  do  with  marked  cards),  is  to  put 
them  in  the  same  social  and  legal  category, — make  their  acts 
unlawful,  and  disreputable.  That  they  are  equally  unscru- 
pulous every  one  knows  ;  and  that  they  are  more  dangerous 


266  OUR  MONEY  WARS. 

to  the  community,  is  indicated  by  the  following  from  the 
Chicago  Tribune :  "  No  mere  blunder,  commercial  or  other- 
wise, could  entail  such  widespread  disaster  in  two  hemi- 
spheres, as  followed  the  collapse  of  the  lard  corner  in  this 
city.  The  act  must  take  high  rank  among  the  crimes  which 
are  committed  against  society.  Human  greed, — seeking 
riches  through  the  means  of  an  unnatural  inflation, — has 
entailed  severe  loss  upon  hundreds  directly  ;  and  upon  scores 
of  thousands  indirectly.  It  led  to  the  blocking  up  of  the 
channels  of  trade  ;  to  a  forced  production  of  material  ;  and 
fostered  a  perversion  of  commercial  ethics  ;  the  last  being  not 
least  among  the  evils  which  followed  in  the  train  of  the 
movement." 

The  Trade  Dollar  Nuisance. — There  was  much  trouble 
from  the  trade  dollars  this  year,  that  were  everywhere  thrust 
upon  innocent  people;  and  refused  by  the  sharp  ones.  July 
23,  1883,  Secretary  Folger  replied,  at  length,  to  a  Dr.  James 
C.  Halleck,  of  Brooklyn,  N.  Y.,  who  had  urged  the  President 
to  order  the  receipt  of  the  coin  at  the  Treasury,  the  same  as 
the  standard  dollar.  He  enclosed  a  letter  from  John  Sher- 
man, setting  forth  how  this  dollar  having  become  of  less 
value  than  Greenbacks  in  1877,  he  had  stopped  the  coinage; 
and  that  since  then  it  had  been  worth  only  the  bullion  price 
of  its  silver. 

The  Greenbackers  at  this  time  had  the  laugh  on  the 
"intrinsic  value"  bullionists :  since  the  trade  dollar  has 
8  grains  more  of  silver  than  the  standard  dollar.  Again  we 
remark  "The  law  creates  money." 

"  These  be  Your  Gods,  O  Israel  !  " — We  finish  this  year, 
1883,  with  another  "  elegant  extract"  about  Vanderbilt  and 
Gould  : — 

The  Herald  hit  the  nail  on  the  head,  when  it  said  yester- 
day, that  last  week's  events  in  Wall  Street  hardly  bear  out 
the  official  utterances  of  Mr.  Vanderbilt,  that  Lake  Shore 
was  cheap  at  120;  and  of  Mr.  Gould  that  Western  Union 
would  certainly  be  advanced,  on  its  merits,  to  par.  So,  at 
least,  think  a  great  army  of  martyrs,  who  bought  these  stocks 
on  these  gentlemen's  representations,  and  now  find  them- 
selves minus  their  money.  Mr.  Vanderbilt  has  built  himself 
a  big  house,  and  seeks  to  purchase  or  force  himself  into 
social  recognition.  Mr.  Gould  is,  perhaps,  satisfied  with  hav- 
ing simply  skinned  the  Street.     Neither  one  nor  the  other  is 


OUR  MONEY  WARS.  267 

likely,  in  the  long  run,  to  secure  either  social  or  financial 
advantage  from  the  very  questionable  proceedings  which 
have  attached  to  their  former  stock  deals  ;  and  which  have 
been  especially  prominent  in  the  present  one.  Lying,  trick- 
ery and  device  are  gradually  becoming  the  sine  qua  non  of  a 
successful  stockbroker  ;  and  it  is  lamentable  to  say  that  the  in- 
struction comes  from  the  headmen  and  the  wealthiest  operators. 

1884. 

A  Wall  Street  Panic. — The  year  1884  is  noted  as  that  in 
which  occurred  a  Wall  Street  panic,  that  would  have  spread 
over  the  country,  if  it  had  not  been  for  the  increased  currency 
through  the  silver  legislation,  and  for  the  fact  that  resump- 
tion had  been  accomplished  by  yielding  largely  to  the  demands 
of  the  Greenbackers. 

Noticeable  among  the  failures  this  year,  were  those  of 
Grant  and  Ward,  James  R.  Keene,  Commodore  Garrison  and 
the  Metropolitan  and  Marine  Banks. 

Boston  despatches  of  Feb.  27,  1884,  complained  that  now, 
for  the  first  time,  Boston  banks  were  "compelled  to  yield  to 
the  silver  policy  of  the  Government.  On  account  of  a  great 
output  of  silver  certificates  among  the  banks,  by  the  Boston 
Sub-Treasury,  the  Clearing-house  had  been  driven  to  admit 
them  for  the  settlement  of  balances." 

A  Great  Victory. — One  of  the  greatest  victories  obtained 
by  the  Greenback  Labor  part}',  was  the  second  endorsement 
of  the  Greenback  by  the  Supreme  Court,  in  March,  1884. 
This  decision  declares  the  constitutionality  of  the  act  of 
March  31,  1878,  reissuing  Greenbacks  in  time  of  peace. 
Space  will  not  permit  the  quoting  of  long  opinions  about  this 
important  matter.  Geo.  S.  Coe  considered  it  "  The  most 
disastrous  thing  that  has  happened  in  the  country  since  the 
beginning  of  the  war."  Since  the  beginning,  mind  you  ! — 
worse  than  any  rebel  victory.  That  is  what  one  might  ex- 
pect from  Coe.  On  the  other  hand,  banker  A.  S.  Hatch 
says,  "  My  general  conviction  is  that  the  decision  is  a  good 
one."  The  Times  thinks  it  "a  proof  of  demoralization." 
The  Tribune  sneaks  right  up  onto  the  fence. 

Many  Marvelous  Facts  are  hinted  at,  in  the  following, 
of  April.  18S4.  by  Rigolo,  of  New  York  Sun.  Among  these 
is  the  fact  that  there  were  few  failures  during  the  great  come- 


268  CUR  MONEY  WARS. 

down  in  stocks  in  1SS3-4  :  and  that  the  few  leading  specu- 
lators held  up  prices  so  long.  If  Rigolo  could  have  got  pay 
for  telling  all  he  knew,  what  a  tale  he  would  have  unfolded  ! 
He  said  : — 

The  stock  market  is  in  a  condition  analogous  to  that  of  a 
man  in  the  last  stage  of  Bright's  disease.  The  patient  does 
not  suffer  much  pain,  but  the  speedy  approach  of  death  is 
evident  in  the  pinched  nose,  the  hollow  cheeks,  and  the  livid 
tint  of  the  skin.  The  collapse  is  likely  to  come  at  any 
moment,  and  the  sooner  it  comes  the  better  it  will  be  for 
everybody.  The  Wall  Street  organism  has  shown  remark- 
able staying  powers.  There  were  no  failures,  with  all  the 
tremendous  decline  that  has  taken  place  within  the  last  three 
years,  and  there  are  no  big  failures  to  be  apprehended  at 
present.  Consequently,  everything  is  to  be  gained  by  a 
speedy  settlement  of  the  agony.  Since  the  patient  is  in- 
curable, the  sooner  he  dies  the  better  it  will  be  for  the  sur- 
vivors. 

Another  ten  or  fifteen  points'  drop  in  prices,  will  revive 
Wall  Street  business,  to  an  extent  which  will  astonish  and 
attract  into  brokers'  offices  everybody  who  has  any  spare 
cash.  But  neither  investors  nor  speculators  will  appear  there 
before  the  sick  man  is  actually  dead.  Those  who  are  inter- 
ested in  the  revival  of  Wall  Street  business  (and  there  are 
several  thousand  men  who  are  so,  besides  the  1, 100  brokers) 
must  try  to  bring  things  to  a  focus  as  fast  as  possible.  It 
would  be  preferable  to  settle  the  whole  thing  before  Summer 
fairly  sets  in,  instead  of  dragging  it  for  another  four  or  five 
months,  till  the  moneyed  people  come  back  from  Saratoga, 
Newport,  and  Europe.  If  men  like  Gould,  Sage,  Cyrus 
Field,  Vanderbilt,  and  a  few  of  the  speculative  bank  directors, 
had  courage  enough  to  see  a  temporary  loss  (on  paper)  of  a 
few  millions  of  dollars,  and  leave  the  market  to  itself,  a  com- 
plete re/olution  would  take  place  in  Wall  Street  in  a  few 
weeks  ;  and  they  would  have  a  chance  to  make  up,  several 
times  over  again,  the  temporary  loss  which  their  books  might 
show  during  the  drop.  There  are  fair  indications  that  Mr. 
Gould  shares  this  view;  for  he  evidently  does  not  protect 
his  stocks.  But  the  action  ought  to  be  a  concerted  one  on 
the  part  of  all  the  magnates,  if  it  is  to  be  made  a  success  of. 
No  new  life  is  likely  to  be  infused  into  stock  speculation 
until  Erie  is  below  $10,  Wabash  and  Denver  below  $5,  Read- 


OUR  MONEY  WARS.  269 

ing  and  Jersey  about  $25  and  $50  respectively,  the  Grangers 
about  10  points  down,  and  the  ex-Villards  and  the  rest  of 
the  list  in  proportion.  At  something  like  such  figures,  a  very 
fair  speculative  demand  could  probably  be  created  both  at 
home  and  abroad, 


April  13,  1884,  George  Ticknor  Curtis, — an  alleged  con- 
stitutional lawyer, — appeared  before  the  House  Committee 
on  the  Judiciary,  to  argue  for  an  amendment  to  the  Consti- 
tution, that  would  upset  the  recent  decision  of  the  Supreme 
Court  in  favor  of  the  Greenback. 

He  Bucked  Against  the  Wizard. — May  1,  1884,  Keene 
suspended  payment,  after  a  furious  career  of  speculation  in 
California  and  New  York.  He  got  in  with  Gould,  soon  after 
coming  from  San  Francisco ;  and  made  money  till  he  broke 
With  the  wizard,  in  1S77.  Here  is  an  epitome  of  his  after 
career  :  Gould  is  reported  to  have  said,  as  an  excuse  for  the 
dissolution  of  their  friendship,  that  Keene  had  played  him  a 
shabby  trick,  and  he  was  done  with  him.  Keene,  on  his 
side,  asserted,  according  to  friends,  that  Gould  had  gone 
back  on  his  friends  and  sold  them  out. 

As  one  of  the  results  of  this  little  misunderstanding, 
Major  Selover,  who  had  been  Keene's  broker  and  admirer, 
picked  Mr.  Gould  up  from  "  the  Street  "  by  the  collar,  one 
afternoon,  in  August,  1S77,  and  deposited  him  with  great 
energy  into  an  Exchange-place  area,  greatly  to  the  personal 
surprise  of  a  good-natured  barber,  who  was  shaving  a 
customer.  Keene  said  he  was  rejoiced  that  retribution  had 
overtaken  Mr.  Gould ;  on  the  ground  that  Mr.  Gould  was 
the  wickedest  man  in  the  world. 

The  two  men  never  spoke  after  that  ;  but  Mr.  Keene,  as 
a  result  of  his  conflicts  with  Mr.  Gould  as  a  rival,  dropped  a 
pile  that  was  reported  to  contain  $6,000,000.  He  lost  it  in 
trying  to  get  up  a  corner  in  wheat,  and  to  fool  with  Jersey 
Central  stocks.  He  held  on  to  Jersey  Central  grimly, 
until  it  ran  down  forty  points  in  a  single  week  at  a  break- 
neck pace. 

Just  before  this  little  experience,  he  was  known  to  be  worth 
$9,000,000  in  cash  ;  and  Isidor  YVormser,  his  broker,  said  that 
one  day  he  saw  in  Mr.  Keene's  office  as  much  as  $2,400,000 
in  cold  cash. 

He  got  all  he  had  lost  back  again,  and   more   too,  with  a 


270  OUR  MONEY  WARS. 

rush  of  his  old  luck;  and  in  1880,  during  the  big  boom  in 
stocks,  he  was  reputed  to  be  the  possessor  of  $20,000,000. 

It  was  at  this  period, — the  acme  of  his  success  and  fame, — 
that  the  white  ribbon  with  the  blue  spot,  floating  above  Ameri- 
can horseflesh,  brought  the  name  of  Keene  into  the  mouth 
of  everybody  who  was  a  lover  of  the  turf.  The  millionaire 
was  kept  busy  spending  some  of  his  ducats  for  champagne, 
to  celebrate  the  victory  of  his  stable  abroad  and  at  home. 
In  1 88 1,  Foxhall  amazed  the  world  by  carrying  the  white  with 
the  blue  spot  to  the  front  in  the  race  for  the  Grand  Prize  ;  and 
Keene  was  king  of  the  turf  as  well  as  a  king  of  the  Street ; 
and  a  fusilade  of  champagne  corks  testified  to  his  popularity. 

The  see-saw  of  the  Street  brought  him  down  again  ;  and 
when  Guiteau's  shot  paralyzed  the  country,  he  was  reputed 
to  be  pretty  nearly  gone  up  financially.  Again  he  rallied, 
however,  and  went  on  see-sawing  till  he  got  overwhelmingly 
swamped  by  the  great  Northern  Pacific  and  O.  T.  downfall. 
Bad  luck  followed  him,  until  it  ended  yesterday  with  his  an- 
nouncement of  "  Suspension  of  payments." 

"  He  lies  flat  on  his  back,"  said  an  old  broker,  "a  victim 
to  the  folly  of  trying  to  be  a  bull  on  a  falling  market.  He 
probably  hasn't  $5,000  left.  His  fall  won't  affect  the  market 
in  the  slightest.  It  was  known  for  months  that  it  was 
coming." 

Commodore  Garrison — one  of  the  leading  millionaire 
speculators  of  the  country,  failed  in  the  spring  of  1884.  He 
was  heavily  interested  in  Western  railroads,  and  a  man  of 
striking  appearance.  His  face,  massive  and  foxy,  seemed  a 
cross  between  that  of  Daniel  Webster  and  Martin  Van  Buren. 
The  lying  and  cheating  of  big  speculators  had  not  then 
ceased  to  be  remarkable.  Here  is  what  Rigolo  of  the  Sun 
said  : — If  something  more  was  wanted  finally  to  disgust  every- 
body with  Wall  Street,  and  frighten  him  away  from  it,  this 
something  was  admirably  done  hist  week.  The  failure  of  men 
reputed  to  be  arch  millionaires,  is  in  itself  a  strong  disturbing 
element.  But  when  the  very  possibility  of  their  failure  is 
indignantly  denied  by  the  failing  men  themselves,  within  a 
few  hours  of  their  making  an  assignment,  the  business  com- 
munity is  placed  in  the  position  of  a  paymaster's  heavily- 
laden  chest  carried  into  the  camp  of  cowboys  and  road  agents. 
The  commotion  produced  by  the  circumstances  of  Com- 
modore Garrison's  failure,  was  of  the  most  alarming  character. 


OUR  MONEY  WARS.  27 1 

When  confidence  in  public  statements  of  facts  is  gone,  the 
whole  business  edifice  of  a  community  falls  to  pieces.  When 
it  becomes  evident  that  no  plain,  truthful  statement  of  facts 
from  any  millionaire,  bank  president,  or  railroad  president 
can  be  obtained,  every  man  of  sound  mind  locks  up  in  his 
safe  the  ready  cash  he  has  got,  and  sends  to  Jericho  every 
business  except  that  of  which  he  has  absolute  control  himself. 
It  is  the  fault  of  lying  millionaires,  lying  bank  Presidents, 
and  lying  railroad  magnates,  that  the  denials  are  now  ac- 
cepted as  confirmations.  The  momentary  flurry  created  in 
the  stock  market  on  Saturday  morning  has,  it  seems,  also 
postponed  the  collapse  of  two  or  three  important  Wall  Street 
firms.  But  the  last  hour  of  business  fairly  suggests  the  prob- 
ability of  our  hearing  of  them  to-day  or  to-morrow  ;  unless, 
of  course,  the  Gould-White-Morgan  combination  have  money 
and  courage  enough  to  try  once  more  to  put  prices  up  by 
means  of  the  squeezing  artifices  in  which  they  are  adept. 

The  Blasted  Silver  Did  it. — The  St.  Louis  Republican 
said  on  May  23,  of  this  bankers'  panic  of  18S4  : — If  there  is 
any  one  thing  of  more  smiting  brilliancy  than  the  financier- 
ing of  New  York  bankers  and  brokers,  it  is  the  reasoning  of 
a  New  York  newspaper.  The  New  York  Tribune  solemnly 
tells  us  that  "  there  is  not  a  competent  student  of  financial 
questions  in  the  country  who  does  not  see,  that  among  all  the 
causes  of  the  present  disturbance  and  peril,  the  continued 
coinage  of  silver,  with  the  issue  of  paper  certificates  against 
coined  silver,  is  the  most  potent.  All  about  us  lie  financial 
wrecks,  caused  by  this  mischievous  policy." 

What  a  pity  we  ever  revived  the  coining  of  good,  hard 
silver  dollars  !  Had  we  not  done  it,  the  Grants  would  have 
kept  their  fortunes,  the  flabbergasted  millionaire  presidents 
of  broken  National  banks  would  have  remained  exemplary 
observers  of  the  law,  and  Mr.  Ferdinand  Ward  would  have 
lived  and  died  a  paragon  of  honesty. 


The  old  N.  Y.  Journal  of  Commerce,  is  still  occasionally 
worth  quoting.  It  said  during  this  panic  : — A  large  volume 
of  call  loans  hanging  over  the  market  are  as  dangerous  as  a 
dynamite  cartridge,  when  the  shock  of  a  rude  awakening 
comes  ;  and  no  one  can  tell  how  far,  or  in  what  direction,  the 
explosion  will  make  itself  felt.  The  danger  is  greatly  in- 
creased by  the  custom  of  allowing  interest  on  deposits. 


272 


OUR  MONEY  WARS. 


The  Bey  of  Tunis  has  Coupon  Bonds. — For  a  temporary 
rest,  we  fly  across  the  ocean,  and,  as  misery  loves  company, 
we  take  a  laugh  at  the  old-time  pirates  of  North  Africa  ;  when 
we  find  them  under  the  rack  of  that  most  relentless  and  cruel 
of  pirates,  the  modern  Shylock.  In  the  London  Weekly 
Intelligencer,  we  find  that,  pursuant  to  the  decree  of  His 
Highness,  the  Bey  of  Tunis,  of  May  27,  1884,  Consolidated 
four  per  cent,  bonds-,  etc.,  etc.,  amounting  to  many  million 
francs  are  to  have  their  coupons  paid  in  Paris  at  Messrs. 
Rothschilds  Brothers,  etc.,  etc.  This  reminds  one  of  a  picture 
in  Redpattis  Weekly  where  John  Bull  stands  in  full  regiment- 
als over  a  prostrate  Egyptian,  who  is  all  tied  up  with  "  bonds  ", 
while  a  Jew  bondholder  asks  him,  "  How  you  like  dese  bonds 
of  Egypt  ?  "  The  Oriental  tyrant  now,  instead  of  raiding  his 
own  or  the  neighboring  peoples,  borrows  money  in  England 
or  France,  and  gets  the  English  and  French  to  collect  it  at 
the  point  of  the  bayonet. 

Back  to  State  Banking. — The  Mechanics  and  Traders' 
Bank  of  New  York,  which  was  organized  in  1830,  changed 
back  to  a  State  bank  in  May,  1884.  The  cashier  said: 
"  The  reason  that  the  large  down-town  banks  continue  as 
National  banks  is,  because  they  carry  the  deposits  of  out-of- 
town  banks  ;  which  are  allowed  to  return,  as  part  of  their 
legal  reserve,  their  deposits  in  the  city  banks." 

Just  the  Other  Way. — In  June,  1884,  Henry  Kemp 
made  this  statement  in  Bradstreet :  "  It  may  be  asked,  how 
are  you  to  economize  the  use  of  money  in  a  country  ?  I 
answer,  simply  by  increasing  the  number  of  good  banks  of 
deposit  and  discount.  It  is  the  small  number  of  these  banks 
in  France,  as  compared  with  England  and  this  country,  that 
makes  the  former  require  thrice  the  amount  of  currency  per 
capita  of  her  population,  that  the  two  latter  countries  require. 
Banks  collect  and  loan  the  money  that  would  be  stored  away 
in  the  strong  boxes  of  merchants  and  others,  for  deferred 
payments  and  purchases  ;  and  thus  the  money  is  kept  in  cir- 
culation until  wanted  by  the  banks.  Hence  the  deposit  and 
discount  bank  is  the  economizer  of  the  amount  of  money  re- 
quired in  a  country."  Greenbackers  take  just  the  opposite 
view.  They  glorify  France  for  having  enough  money  to  do 
its  business  without  so  many  banks.  So  France  never  has 
a  disastrous  panic.  Its  money  is  not  only  abundant  and 
widely  circulated,  and  kept  passing  from  hand  to  hand,  but 


OUR  MONEY  WARS.  273 

also  it  is  not  gathered  by  banks  in  money  centers  to  lend  to 
speculators  on  call  ;  and  then  be  missing  when  a  panic  comes. 

Banks  Retiring  Circulation. — Here  is  the  status  of  the 
National  banks  June  30,  1884  :  At  the  close  of  June,  1883, 
there  were  2,417  National  banks  in  existence.  The  number 
at  the  termination  of  June,  1884,  was  2,625,  an  increase  over 
the  previous  fiscal  year  of  208.  Not  only  have  the  National 
banks  increased  in  number,  but  their  capital  stock  has  like- 
wise increased.  On  the  30th  of  June,  1883,  the  aggregate 
capital  was  $500,298,312.  One  year  later  the  aggregate  was 
$522,517,41 1,  a  growth  of  more  than  twenty-two  millions  in 
a  single  year.  Notwithstanding  the  increase  in  the  number 
of  banks  and  banking  capital,  there  has  been  a  steady  fall- 
ing off  in  bank  circulation  since  1S81.  At  the  close  of  that 
year  the  circulation  put  out  by  the  banks  was  $325,000,000. 
.The  following  year  it  was  $315,000,000.  At  the  close  of 
June,  1883,  it  had  fallen  to  $311,000,000,  and  at  the  close  of 
the  fiscal  year  ended  June  30,  18S4,  it  had  decreased  to 
$295,175,334.  The  cause  for  this  retirement  of  bank  circu- 
lation is  to  be  found  in  the  forced  withdrawal  of  bonds  de- 
posited with  the  government  to  secure  circulation. 

The  Coming  Deluge. — In  July,  1884,  the  N.  Y.  Even- 
ing Post  was  wailing  thusly  about  the  coming  deluge  of 
silver,  and  flight  of  gold : — That  the  steady  drain  of  gold, 
which  has  been  going  on  for  the  last  six  months  will,  if  con- 
tinued much  longer,  force  the  Government  to  using  silver  in 
making  its  payments,  either  through  the  Clearing-house  of 
this  city  or  over  the  counters  of  the  Sub-Treasury,  was  the 
universal  opinion  among  many  prominent  bankers  whom  a 
reporter  of  the  Evening  Post  visited  this  morning.  Since 
January,  the  Treasury  has  lost  about  $50,000,000  of  gold  ; 
the  decrease  having  gone  on  almost  without  interruption. 
At  the  end  of  May,  the  gold  balance  stood  at  $140,000,000 ; 
at  the  end  of  June  it  was  $133,000,000  ;  on  July  19  it  was 
$122,000,000;  and  on  last  Saturday  it  had  fallen  to  $1 18,- 
000,000  only  $18,000,000  more  than  the  Secretary  of  the 
Treasury  is  required  by  law  to  keep  as  a  reserve,  to  offset  the 
circulation  of  National  bank-notes.  [!]  No  one  wants  to  take 
silver  ;•  but  with  a  decreasing  reserve  of  gold  and  an  increas- 
ing stock  of  silver,  supplemented  by  a  coinage  of  $2,000,000 
a  month,  there  can  be  no  escape  from  coming  down  to  sil- 
ver, unless  there  is  a  turn  in  the  tide. 
18 


274 


OUR  MONEY  WARS. 


The  President  of  the  Gallatin  Bank  said,  that  if  the  Govern- 
ment began  to  pay  out  silver,  the  banks,  would  have  to  take 
it.  The  Clearing-house  tried  to  bar  out  silver  ;  and  the  Gov- 
ernment forbade  banks  so  doing  to  belong  to  the  Clearing- 
house. Hitherto  the  Government's  daily  debt  to  the  Clear- 
ing-house, of  about  $500,000,  had  been  paid  in  gold.  Silver 
was  cumbersome.  A  million  dollars  took  a  space  eight  by 
five  by  four  feet. 

Godkin's  Ghoulish  Glee. — On  July  28,  1884,  that  gold 
maniac,  Godkin,.  had  an  editorial  in  the  Evening  Post  headed 
"  The  End  of  Bi-Metalism."  He  was  in  ghoulish  glee  over 
a  gloomy  letter  from  H.  H.  Gibbs,  a  silver  leader  of  England, 
and  called  it  "a  sort  of  obituary  notice  of  bi-metalism  in  the 
Old  World." 

Wm.  H.  Vanderbilt  was  still,  in  the  summer  1884,  mak- 
ing the  hay  on  which  his  high-toned  offspring  are  now  gently 
and  genteelly  browsing.  Here's  a  love-tap  from  the  N.  Y. 
Sun: — The  little  performance  with  the  new  issue  of  New 
York  Central  bonds,  after  interminable  public  denials  that 
such  an  issue  was  ever  contemplated,  put  an  extra  bright 
feather  in  Vanderbilt's  veracity  cap.  The  mental  process 
which  makes  a  man  hoard  up  millions  upon  millions,  and 
build  for  himself  the  reputation  he  does  at  home  as  well  as 
abroad,  is  really  incomprehensible. 

The  Clearing-House  and  the  Treasury. — This  is  the 
way  in  which  the  N.  Y.  dailies  were  talking  about  the  relations 
of  the  U.  S.  Treasury  and  the  N.  Y.  Clearing-house,  in  the 
summer  of  1884  : — Tb.e  relations  of  the  Treasury  and  the  Sub- 
Treasury  to  the  New  York  Clearing-house  have  never  been 
thoroughly  understood,  and  have  frequently  been  very  differ- 
ent from  the  relations  of  other  Sub-Treasuries  to  the  Clearing- 
houses in  their  respective  cities.  For  instance,  although 
Sub-Treasuries  have  never  received  any  instructions  upon  that 
point,  it  is  the  custom  at  nearly,  if  not  all,  of  the  other  Sub- 
Treasuries,  to  tender  one-half  or  less  of  the  balance  due  from 
the  Treasury  to  the  Clearing-house  in  silver  certificates. 
This  has  come  to  be  recognized  as  one  of  the  unwritten 
Treasury  regulations  for  those  cities  ;  but  in  New  York,  al- 
though the  Sub-Treasury  is  generally  a  debtor  to  the  Clear- 
ing-house, of  from  half  to  three-quarters  of  a  million  dollars 
daily,  all  settlements  have  been  made  by  the  Sub-Treasury 
with  the  Clearing-house  in  gold  or  gold  certificates.     This  is 


OUR  MONEY  WARS.  275 

entirely  voluntary  on  the  part  of  the  New  York  Sub-Treas- 
urer ;  but,  of  course,  the  practice  has  not  grown  up  without 
the  approval  of  the  Secretary  of  the  Treasury.  There  has 
recently  come  a  rather  earnest  demand  that  the  New  York 
Clearing-house  should  be  treated  as  the  Clearing-houses  of 
other  cities  are  ;  and  that  the  spirit  of  the  law  which  forbids 
discrimination  against  silver  certificates  should  not  be  viola  <1. 
Attention  has  been  called  to  the  fact,  that  while  it  is  true 
that  the  New  York  Clearing-house  has  rescinded  its  order 
refusing  to  take  silver  certificates,  in  view  of  the  enactment 
of  the  law  of  July  12,  1883,  which  forbids  National  banks  to 
be  members  of  Clearing-houses  which  do  so  discriminate,  it 
is  reported  that  the  members  of  the  New  York  Clearing- 
house have  a  tacit  understanding  that  silver  certificates  shall 
not  be  tendered.  But  whether  the  members  of  the  Clearing- 
house effect  their  settlements  with  each  other  with  gold  or 
silver  certificates,  or  any  other  currency,  is  a  matter  of  no 
concern  to  the  Government.  [!]  In  view  of  the  fact  that  the 
Sub-Treasury  is  nearly  always  a  debtor  to  the  Clearing-house, 
the  voluntary  tender  by  the  Sub-Treasury  of  gold  certificates, 
in  each  case,  is  something  which  the  banks  do  not  rightfully 
control.  There  are  those  who  think  that  gold  had  better  be 
in  the  Treasury  and  silver  in  circulation,  if  the  Secretary  of 
the  Treasury  has  to  choose  between  these  two  alternatives  ; 
and  that  the  National  banks  would  pursue  a  wiser  course  not 
to  insist  upon  a  policy  which  continually  depletes  the  Treas- 
ury reserve  in  gold  ;  as  the  greater  the  impairment  of  the 
Treasury  gold,  the  greater  is  the  probability  of  coming  to  a 
silver  basis. 

Times  and  we  Change. — The  Chicago  Tribune  of  Sep- 
tember 24,  1S84,  quotes  a  long  article  from  the  Wall  Street 
News,  beginning  thus,  under  the  heading,  "  The  Union  of 
the  Puritan  and  the  PJlackleg  "  : — "  The  formal  alliance  of 
Mr.  Jay  Gould  and  Mr.  Charles  Francis  Adams,  Jr.,  is  one  of 
those  strange  sights  which  the  whirligig  of  time  sometimes 
presents  to  a  wondering  world.  The  most  telling  exposure 
ever  made  of  the  Erie  rascalities,  was  made  by  the  Massa- 
chusetts gentleman,  who  gained  great  fame  thereby.  His  pen- 
portrait  Of  his  present  partner,  has  passed  into  literature  as 
one  of  the  best  of  its  kind.  It  is  quoted  now  from  time  to 
time,  when  some  peculiar  performance  of  Mr.  Gould  makes 
it  appropriate.     To-day  the  firm  of  Gould   &   Adams  is  reg- 


276  OUR  MONEY  WARS. 

ularly  advertised,  as   one  of  the  prominent  partnerships  of 
financial  circles." 

The  article  goes  on  to  show  that  Mr.  Adams  will  come 
out  with  a  total  loss  of  reputation ;  and  that  those  who 
thought  that  Mr.  Adams'  pull  of  Michigan  Central  was  a 
result  of  inexperience,  will  see, — in  the  light  of  his  puff  of 
Union  Pacific, — that  both  were  stock-gambling  dodges. 


In  October,  18S4,  Secretary  Gresham  Lft  the  Treasury, 
and  Hugh  McCulloch, — about  whom  such  very  contrary 
opinions  are  expressed, — took  hold  again,  under  President 
Arthur. 

Gould's  Greatness. — 18S4,  finds  Jay  Gould  thoroughly 
"  in  touch  "  with  all  the  other  great  American  financiers. 
Some  other  monopoly  paper  said,  apparently,  in  1S84  : — 
It  is  a  sign  of  the  times  that  even  New  York  newspapers, 
which  have  been  unanimous  in  assailing  Jay  Gould,  as  the 
wickedest  man  in  Wall  Street,  are  finding  that  he  is  no  worse, 
after  all,  than  a  great  many  of  his  associates  and  competitors 
in  speculation  ;  and  that  he  is  even  better  than  some  of  them. 
It  is  a  new  thing  to  find  a  good  word  for  Jay  Gould  in  a 
New  York  paper.  The  Sun  of  yesterday  has  this,  fair-minded 
statement :  "  Gould  is  a  schemer  of  immense  genius,  and  a 
financier  of  amazing  abilities.  He  builds  up  immense  sys- 
tems of  railroads  and  telegraphs.  He  is  the  head  and  soul 
of  innumerable  corporations;  some  of  which  are  of  national 
importance.  He  is  a  public  man  in  the  broadest  sense  of 
the  word.  His  name  and  his  works  will  live  in  the  history 
of  the  progress  of  this  country.  The  way  in  which  he  did 
and  still  does  his  work  may  be  objectionable,  even  unjustfi- 
able,  but  that  is  another  question.  He  may  be  a  bad  man,  but 
he  is  a  great  man.  Posterity  will  decide  whether  he  was  as 
bad  as  his  contemporaries  assert  that  he  is." 


It  seems  that  there  was  a  desperate  and  old-fashioned 
scheme  seriously  considered  by  the  British  ministry  in  1884, 
for  retaining  gold.  The  Troy,  N.  Y.  Telegram  said : — The 
proposition  of  the  British  ministry  to  degrade  the  gold  coin 
of  England  by  increasing  the  alloy,  is  a  scheme  to  retain 
the  gold  in  that  country  by  legislation.  If  a  given  amount 
of  gold  bullion  will  make  more  legal  money  in  England  than 
elsewhere  ;  that  country  will  have  no  difficulty  in  retaining 


OUR  MONEY  WARS.  277 

as  much  as   it  wants.     The   proposition   is   meeting  with  de- 
cided opposition  on  all  sides. 


In  1884,  J.  J.  Knox  published  a  book  claiming  to  give  the 
history  of  "  United  States  Notes."  Whoever  reads  this  book 
should  read  that  one  ;  and  determine,  for  himself,  as  to 
which  gives  the  truer  account  of  American  paper  money. 

Not  Useful  Citizens. — It  is  always  pleasing  to  find 
admission  made  by  the  enemy.  Hear  what  the  N.  Y. 
Tribune — the  monopolist's  own — said  in  1884: — "Within 
a  few  years  the  number  of  brokers  in  this  city  has  increased 
immensely,"  said  an  old-time  "  Street "  operator  to  a 
Tribune  reporter.  "  There  are,  without  the  least  exaggera- 
tion, three  or  four  times  as  many  brokers  now  as  there  were 
ten  or  twelve  years  ago.  There  are  about  11,000  brokers  in 
the  city ;  and  they  must  average  $5,000  a  year  each  ;  or  they 
could  not  pay  clerk  hire,  office  rent  and  other  necessary  ex- 
penses. Here  you  have  about  $50,000,000  taken  from  the 
producing  classes  to  support  these  non-producers ;  who 
chiefly  act  as  middlemen  for  others  who  want  to  gamble. 
The  number  of  speculators  is  also  multiplying.  Twenty 
years  ago,  speculation  outside  of  stocks  and  gold,  was  scanty. 
Now  look  at  the  array  of  articles,  such  as  cotton,  wheat, 
corn  and  other  cereal  products,  lard,  pork,  bacon,  butter, 
cheese,  oil,  iron,  steel,  copper,  etc.,  etc.,  which  have  been 
added  to  the  list  of  things  bought  and  sold  on  margins. 
There  are  3,000  members  of  the  Produce  Exchange.  If  each 
article  sold  on  that  floor  was  actually  delivered,  it  would  re- 
quire many  times  the  amount  of  cereals  now  shipped  to  this 
market.  Forty-nine  out  of  fifty  '  sales  '  are  simply  bets,  noth- 
ing more.  The  loser  pays  the  difference  in  price,  and  does 
not  deliver  the  goods.  I  allude  to  the  '  reported '  sales 
only.  The  unreported  sales  are  no  doubt  very  large.  Three 
hundred  members  could  actually  do  the  legitimate  business 
of  this  Exchange — the  actual  buying  and  selling  of  cereals 
in  this  market.  But  business  must  be  made  for  the  extra 
large  number  of  members ;  and  each  article  of  produce 
shipped  to  this  market  is  bought  and  sold  forty  or  fifty  times, 
— but  it  is  only  delivered  once.  The  Petroleum  Exchange, 
finding  there  is  not  enough  oil  in  the  country,  is  now  gambling 
in  railroad  shares  :  perhaps  it  will  next  take  '  pools  '  on  horse- 
races.    The  lowest  limit  of  shares  in  the  Petroleum  Exchange 


278  OUR  MONEY  WARS. 

has  been  reduced  to  ten  ;  so  that  even  the  comparatively 
poor  can  enjoy  the  luxury  of  putting  up  a  margin  on  railroad 
stocks.  This  shows  that  the  passion  for  gambling  is  increas- 
ing year  after  year. 

"  But  the  increase  of  this  large  non-producing  element  of 
brokers — who  merely  act  as  stakeholders  for  those  who 
gamble, — adds  nothing  to  the  industry  or  development  of 
the  country.  Not  one  bushel  of  grain  or  pound  of  metal  is 
added  to  the  resources  of  the  country." 


OUR  MONEY  WARS.  279 


CHAPTER  XVI. 

1885  to  1892. 

THE  BEGINNING  OF  THE  END. 
1885. 

Eelmont-Hewitt-Tildenism. — The  year  1885  opens  with 
the  reign  of  Cleveland  in  the  White  House,  and  Manning  in 
the  Treasury.  Mr.  Cleveland  could  not  wait  until  he  had  taken 
the  oath  of  office,  to  vent  his  Belmont-Hewitt-Tilden 
Democracy.  On  February  24,  1885,  he  wrote  to  A.  J.  Warner, 
and  others,  who  had  admonished  him  about  silver.  He 
demanded  that  we  should  get  rid  of  the  silver  coinage  act 
at  once  ;  otherwise  we  would  be  on  a  silver  basis ;  and  the 
gold  obligations  of  the  Government  could  not  be  met.  He 
exclaimed  that  a  financial  crisis  was  close  at  hand.  Gold 
was  being  expelled  !  Mark  in  his  conclusion,  the  old  gag 
about  an  honest  dollar  for  the  dear  workingman.  He 
said  : — Such  a  financial  crisis  as  these  events  would  certainly 
precipitate, — were  it  now  to  follow  upon  so  long  a  period  of 
commercial  depression,  would  involve  the  people  of  every 
city  and  every  State  in  the  Union  in  a  prolonged  and  disas- 
trous trouble.  The  revival  of  business  enterprise  and  pros- 
perity,— so  ardently  desired  and  apparently  so  near, — would 
be  hopelessly  postponed.  Gold  would  be  withdrawn  to  its 
hoarding  places ;  and  an  unprecedented  contraction  in 
the  actual  volume  of  our  currency  would  speedily  take 
place.  Saddest  of  all,  in  every  workshop,  mill,  factory,  store, 
and  on  every  railroad  and  farm,  the  wages  of  labor,  already 
depressed,  would  suffer  still  further  depression,  by  a  scaling 
down  of  the  purchasing  power  of  every  so-called  dollar  paid 
into  the  hands  of  toil.  From  these  impending  calamities,  it 
is  surely  a  most  patriotic  and  grateful  duty  of  the  representa- 
tives of  the  people  to  deliver  them. 

I  am,  gentlemen,  with  sincere  respect,  your  fellow- citizen, 

Grover  Cleveland. 

Albany,  February  24,  1885. 


2g0  OUR  MONEY  WARS. 

The  enemies  of  U.  S.  notes  never  relax  their  efforts  against 
them.  April  16,  1884,  the  House  Committee  on  Coinage, 
Weights  and  Measures,  unanimously  instructed  representative 
Lacy  to  report  favorably  his  bill  to  prohibit  the  issue  of 
Treasury-notes  of  less  than  five-dollar  denomination  ;  and  to 
provide  for  the  issue  of  one,  two,  and  five  dollar  silver 
certificates. 


On  the  same  day,  Boards  of  Trade  from  various  cities 
were  nagging  at  Congress  to  stop  coining  silver  and  "  save 
the  country."     "  Why  do  the  heathen  rage  ? " 

Manning  Panic. — By  July,  1885,  the  money-lenders  got 
poor  little  Manning  worked  up  to  such  a  frenzy,  that  he  be- 
gan to  buy  millions  of  gold  with  his  silver, — "to  get  ready 
for  the  panic."  Here  is  what  Senator  Teller  said,  in  his 
speech  of  May  14,  1890,  about  that  absurdity: — 

Mr.  Teller. — It  is  pretty  well  known  that  in  July,  1S85,  Mr. 
Jordan,  who  was  then  Treasurer  of  the  United  States,  was 
present  at  a  congregation  of  bank  presidents  in  New  York, 
who  got  together,  ostensibly,  for  the  purpose  of  sustaining 
the  credit  or  the  American  Government ;  which  was  on  the 
verge  of  bankruptcy  !  The  new  Administration  had  just  come 
in.  The  President  had  appealed  to  his  party  associates  to  de- 
monetize silver.  They  had  told  him, — in  terms  polite  but  em- 
phatic,— that  they  would  not  do  it ;  that  the  Democratic  party 
was  net  in  favor  of  the  single  standard  of  gold.  And  then  this 
remarkable  convocation  of  bankers  in  New  York  City  got  to- 
gether, to  prevent  the  Government  of  the  United  States  from 
paying  its  obligations  in  what?  In  silver.  Every  obligation 
that  the  Government  had  out  was  by  law  payable  in  silver. 
It  was  the  money  of  this  country,  and  of  the  contract  ;  and 
not  even  the  gold  barons  had  any  right  to  complain  that 
they  were  getting  silver ;  for  they  had  stipulated  that  they 
would  have  silver  or  gold.  It  was  on  the  face  of  the  bond. 
They  had  put  it  in  the  bond  themselves  ;  and  demanded  that 
it  should  be  put  there  before  they  would  take  the  bond. 

Mr.  Stewart. — It  was  printed  on  every  bond. 

Mr.  Teller. — It  was  printed  on  every  bond,  that  it  was 
payable  in  coin  of  the  then  standard  value  silver  of  July  14, 
1370.  Now,  that  was  the  dire  calamity  that  might  overtake 
the  Government.  So  they  got  together  and  said,  "  The  Gov- 
ernment is  in  danger."     Of  what  ?     Disgracing  itself  by  pay- 


OUR  MONEY  WARS.  2S1 

ing  according  to  its  contract.  The  next  morning,  every 
financial  region  of  the  earth  contained  the  statement  that  the 
Government  of  the  United  States  was  on  the  verge  of  bank- 
ruptcy. Had  there  been  any  executive  officer  in  that  meet- 
ing officially,  he  ought  to  have  been  impeached.  A  more 
shameless  attack  upon  the  public  credit  has  never  been 
known  in  the  history  of  the  finances  of  this  country. 

Was  the  Government  in  danger  of  bankruptcy  ?  I  dem- 
onstrated in  a  speech  that  I  made  here, — but  I  will  not  go 
over  it, — that  there  was  an  abundance  of  gold  to  pay  every 
maturing  obligation  of  the  Government.  There  was  not  the 
slightest  suspicion  of  danger  of  paying  a  silver  dollar ;  and 
the  Treasurer,  and  the  Secretary,  and  the  Chief  Executive 
knew  it.  They  snid  that  they  were  not  responsible  for  the 
transaction.  They  said  they  did  not  get  it  up  ;  it  was  these 
loving  bankers  who  were  anxious  to  give  the  Government  a 
lift  and  keep  its  credit  at  par.  And  Mr.  Jordan,  the  Treas- 
urer, said  he  was  only  a  looker-on  and  not  there  officially. 

Mr.  Teller  then  went  on  to  show  that  there  was  abundance 
of  money  in  the  Treasury — gold,  Greenbacks,  National  bank 
notes  and  silver  ;  and  all  could  have  been  turned  into  gold. 
He  said,  "  That,  I  assert,  was  a  combination  and  conspiracy 
of  the  bankers  of  New  York,  to  frighten  the  American  people, 
— to  compel  them  to 'bring  the  influence  of  public  opinion 
upon  the  legislative  department, — to  compel  the  suspension 
of  the  coinage  of  silver." 

"  Great  Heads  "  Rattled. — It  is  interesting  to  watch 
some  of  our  "great  thinkers  and  leading  economists,"  floun- 
dering through  the  years.  Here  is  the  immaculate  and  vo- 
ciferous Edward  Atkinson,  saying,  in  Aug.  1885,  "  Witness 
the  effect  of  the  great  mass  of  gold  which  was  suddenly 
placed  at  the  disposal  of  Germany  by  the  payment  of 
the  French  indemnity.  It  may  be  questioned  whether  the 
disasters  which  ensued  from  this  sudden  accretion  of  wealth 
in  Germany,  were  not  greater  than  the  burden  imposed 
upon  P  ranee.  It  precipitated  the  one  country  into  disastrous 
speculation  ;  while  the  other  went  quietly  to  work  to  re- 
place the  devastation  of  war."  He  thinks  that  the  thousand 
million  dollars  indemnity  was  paid  in  gold  ;  whereas  only 
two  hundred  and  fifty  millions  was  paid  in  money  of  any  sort ; 
and  the  rest  in  French  goods, which,  through  a  wise  use  of  paper 
money  by  the  French,  were  made  to  utterly  swamp  the  same 


282  OUR  MONEY  WARS. 

sorts  of  German  goods.     Hence  the  German  misery ;  which 
was  only  in  a  small  degree  from  "  disastrous  speculation." 

Another  and  a  ludicrous  slip  up,  is  seen  in  the  following 
from  the  N.  Y .  Journal  of  Commerce  of  Oct.  1885,  concerning 
the  wording  of  the  U.  S.  4  per  cent,  bonds  of  1907.  Editor 
Stone,  that'fossilized  Wall  Street  oracle,  says  :  "  We  drew  up 
the  clause  in  question  to  be  engraved  on  the  first  bonds  upon 
which  the  promise  was  made  ;  and  wrote  it  'gold  coin  of  the 
standard  value,'  etc.  Some  time  afterward,  when  there  was 
a  question  about  the  matter,  we  stated  that  they  were  payable 
in  gold  coin ;  supposing  that  our  suggestion  had  been 
adopted,  precisely  as  we  wrote  it.  In  reply,  a  Wall  Street 
broker  brought  in  a  bond  ;  and  we  found,  to  our  great  sur- 
prise, that  the  word  '  gold  '  had  been  omitted." 

What  an  outrage  !  It  is  enough  to  make  all  the  plants  in 
Editor  Stone's  celebrated  Brooklyn  greenhouses  and  gardens 
turn  white  with  wrath.  It  would  be  interesting  to  learn  how 
much  more  gold-bug  mischief,  "  we  "  had  a  hand  in.  Fort- 
unately, on  this  occasion,  "we,"  did  not  "get  there." 

A  Curious  Proposition  was  made  to  the  United  States  in 
1885,  by  the  noted  English  economist  and  bi-metalist,  Morton 
Frewen.     He  said  : — - 

And  it  seems  to  me  that  you  might  throw  open  your  Pacific 
ports,  and  trade  freely  through  them  with  all  nations  :  while 
continuing  the  existing  tariffs  on  your  Eastern  seaboard. 
For,  if  you  did  this,  none  of  our  manufactures  could  be  sent 
round  the  world  as  it  were,  to  Pacific  ports  ;  there  to  make  a 
profitable  entry ;  but,  on  the  other  hand,  China  and  India 
would  send  you  tea,  rice,  cotfee,  jute,  etc.,  in  exchange  for 
the  silver  of  Colorado,  Nevada,  and  California.  And  in  this 
way  you  would  encourage  the  building  of  a  mercantile  marine 
in  the  glorious  harbors  of  your  Pacific  coast, — and  such  a  trade 
would  spring  up  at  free-trade  England's  expense,  across  the 
Pacific,  as  would  force  England  to  buy  and  monetize  sil- 
ver on  your  terms.  There  can  be  no  question  that  if,  as  we 
are  now  told,  China  is  waking  up  from  the  sleep  of  centuries, 
she  is  destined  to  absorb  silver  in  such  quantities,  that  ten 
years  hence  the  ratio  of  1  to  16  may  be  altogether  against 
gold.  As  a  nation,  therefore,  you  have  everything  to  gain  by 
continuing  to  support  silver. 

Judging  from  present  appearances,  the  gold-using  nations 
are  insolvent.     The  tide  of  their  currency  requirements  is 


OUR  MONEY  WARS.  283 

retreating,  and  leaving  them  stranded   high  and  dry  on  the 
mud  banks  of  a  contracted  currency. 

1886. 

A  Coon  Treed. — Whenever  an  ex-Treasury  official  wants 
to  get  a  bank  presidency,  or  to  please  the  money-lenders  gen- 
erally,— he  begins  to  shout  for  gold  payments.  A  coon  of 
that  sort  was  thus  handled  by  the  N.  Y.  Sun  February  23, 
1SS6  :  "  The  proposition  that  good  faith  requires  the  pay- 
ment of  the  outstanding  United  States  bonds  in  gold  is  elab- 
orately supported  by  Mr.  Charles  E.  Coon,  lately  Assistant 
Secretary  of  the  Treasury,  in  a  letter  to  the  New  York  Her- 
ald. Mr.  Coon  bases  his  argument  upon  the  use  of  the  word 
'gold  '  by  members  of  Congress  and  public  officials,  in  speak- 
ing of  the  bonds  at  various  dates,  down  to  June  19,  1877." 
The  Sun  says  that  if  he  had  followed  the  record  a  few  months 
further,  viz.,  to  January  25  and  28,  1878,  he  would  have  come 
upon  the  Congress  resolution  of  that  time,  declaring  that  all 
the  outstanding  bonds,  except  200  million  of  4/^s  and  75 
million  of  4s,  are  payable  in  silver  dollars. 

The  Wavs  of  the  Robber  Nation. — The  following  from 
Senator  Teller's  Congress  speech,  of  May  14,  1890,  shows, 
that  England,  the  great  robber  nation,  legislates  only  for  her 
money-lending  class  and  Government  officials  of  late  ;  and 
robs  her  own  producers  as  brutally  as  those  of  other  nations, 
by  maintaining  the  gold  basis  : — 

The  American  farmer  has  suffered  because  of  the  mis- 
taken financial  policy  of  England,  followed  by  the  United 
States  with  slavish  subserviency, — the  English  farmer,  not 
having  the  many  natural  advantages  possessed  by  the  Ameri- 
can farmer,  has  suffered  much  more.  I  have  here  a  state- 
ment made  in  March,  1886,  by  the  senior  land  commissioner 
of  Great  Britain,  Sir  James  Caird,  before  the  Royal  Commis- 
sion of  Trade  and  Industry,  which  I  have  had  copied,  f  do 
not  desire  to  read  it,  but  I  desire  to  put  it  in  the  Record.  I 
desire  that  the  American  people  may  see  what  this  financial 
policy,  with  reference  to  silver,  has  done  for  the  agriculturists 
of  Great  Britain,  as  well  as  this  country.  Mr.  Caird  came 
before  the  commission  and  said  he  was  the  senior  land  com- 
missioner of  England  ;  that  he  had  prepared  himself  to  give 
his  testimony  before  the  commission  as  to  the  condition  of 
the  agriculturists  of  that  country.      His  statements  were  quite 


284  OUR  MONEY  WARS. 

startling,  and  can  be  found  in  the  second  report,  on  page  293 
and  the  subsequent  pages  to,  and  including,  page  308.  One 
member  of  the  commission  spoke  of  the  statement  as  "  having 
regard  to  the  very  fearful  condition  of  things  as  shown  by 
you."  The  condition  of  1886  was  compared  with  ten  years 
before,  and  it  was  stated  that,  on  an  average,  the  landlords 
had  lost  30  per  cent.,  the  tenants  60  per  cent,  and  laborers  10 
per  cent.,  or  a  total  loss  to  tenants,  laborers  and  landlords  of 
spendable  income  of  ^42, 800,000  during  the  last  year  ;  and 
in  this  estimate  Ireland  was  not  included.  He  declared  that 
the  price  of  wheat  had  been  less  each  year  (except  the  year 
1877);  and  the  loss  to  farmers  on  wheat,  comparing  prices 
with  the  price  of  1874,  had  been,  ten  years,  ^97, 100,000,  or 
nearly  $500,000,000.  He  declared  that  the  Irish  agriculturist 
no  longer  "  farmed  for  profit,  but  simply  for  bare  subsistence." 
#  *  *  '  *  #  * 

"  Do  you  suppose  that  the  depression  in  agriculture  has 
been  greater  in  degree  than  that  of  other  British  interests  of 
great  magnitude  ?  " 

"  I  am  speaking  before  gentlemen  who  are  very  much  bet- 
ter informed  upon  that  question  than  I  am,  and  I  can  only 
venture  to  offer  a  calculation  which  has  been  made  by  a  gen- 
tleman who  placed  it  before  me  ;  and  which  shows  that  whilst 
the  fall  of  price  in  all  kinds  of  food  up  to  1885  was  25  per 
cent.,  the  fall  in  iron,  copper,  tin,  lead,  and  coals  was  35  per 
cent. ;  in  textiles,  cotton,  flax,  hemp,  wool,  and  silk,  32  per 
■cent.  ;  in  sundry  materials,  hides,  leather,  indigo,  and  other 
things  26  per  cent.  ;  and  therefore  it  would  appear  that  many 
of  those  great  British  interests  are  suffering  from  the  fall  of 
price  quite  as  much  as  agricultural  interests." 

Lord  Chancelors'  Gold  Pensions. — An  English  Royal 
Commission  was  appointed  in  September,  1S86,  "to  inquire 
into  the  recent  changes  in  the  relative  values  of  the  precious 
metals."  It  worked  two  years.  Edwards  Pierrepont,  in  the 
North  American  Review,  says  : —  "  The  report  is  inconsistent 
in  its  parts,  fertile  in  untenable  objections,  inconsequent  in  its 
conclusions,  proposing  plans  of  relief  quite  inadequate  to  the 
conditions  ;  wholly  impracticable,  and  absolutely  bewildering 
to  any  honest  seeker  after  light  upon  this  recondite  [?]  sub- 
ject. From  its  scope  and  drift,  one  might  easily  imagine  that 
the  six  commissioners  were  all  retired  Lord  Chancelors,  in- 
tellectually convinced  that  international  bi-metalism  was  the 


OUR  MONEY  WARS.  285 

only  remedy  fo"r  the  evils  under  which  Great  Britain  and  her 
Indian  Empire  now  suffer  ;  but  dreading  lest  the  introduction 
of  silver  might  diminish  the  purchasing  power  of  their  gold  pen- 
sions" 

The  scoundrels  ! 

What  the  Soldiers  Lost. — Mr.  Weaver,  Greenback  labor 
candidate  for  the  Presidency  in  1880,  was  for  several  terms 
in  Congress.  He  was  most  noted  as  a  skillful  congressional 
fighter — generally  on  the  side  of  the  people.  One  of  his  most 
unique  efforts  is  thus  described  by  the  St.  Louis  Republican 
in  1S86  :  "  Mr.  Weaver  (Greenbacker)  of  Iowa,  has  introduced 
in  the  House  a  bill  to  appropriate  $300,000,000  to  indemnify 
the  soldiers  of  the  Union  army,  for  the  losses  they  sustained 
in  the  depreciation  of  the  Greenbacks  they  were  paid  in  dur- 
ing the  war.  This  bill,  or  one  just  like  it,  has  been  offered 
in  almost  every  Congress,  for  the  last  eight  years  :  but  little 
attention  has  been  paid  to  it,  and  it  is  not  probable  that  it 
will  receive  consideration  now.  The  soldiers  of  the  late  war 
do  not  have  the  good  fortune  to  belong  to  the  favored  class 
of  American  citizens.  The  Greenbacks  they  were  paid  in 
were  worth  37  to  80  cents  on  the  dollar  in  coin  ;  and  the 
Greenback  bonds  sold  by  the  Government  during  the  war, 
were  bought  at  the  same  rates.  But  while  a  Republican  Con- 
gress gratuitously  turned  a  profit  of  20  to  40  per  cent,  into 
the  pockets  of  the  bondholders,  by  making  their  Greenback 
bonds  payable  in  coin,  it  has  repeatedly  refused  to  extend 
similar  favor  to  the  soldiers." 

A  specimen  of  the  tone  of  the  gold-bugs  in  1886  is  seen  in 
an  editorial  by  Horace  White  in  the  N.  Y.  Evening  Post  of 
January  13.  This  deluded  mortal  who  had  joined  himself  to 
two  "others worse  than  himself,"  Carl  Schurz  and  E.  L.  God- 
kin,  makes  his  severe  criticism  on  Senator  Beck's  silver 
speech.  The  only  fresh  point  he  makes  is  that  the  money 
reformers  find  their  argument  for  paying  the  bonds  in  Green- 
backs on  the  back  of  that  money,  while  the  front  promises 
to  pay  a  dollar  !  !  ! 

1887. 

A  Deluge  of  Trusts  and  Syndicates. — The  year  1887 
shows  no  very  marked  financial  events.  Everything  drifts 
toward  trusts  and  syndicates  ;  and  these  hold  the  public  atten- 
tion. English  capital  pours  over  here — absorbing  our  best- 
paying  industries.     The  continued  effort  of  the  money-lenders 


286  OUR  MONEY  WARS. 

to  suppiess  silver  and  Greenbacks  is  shown  by  the  following 
editorials  of  our  pet  British  daily — the  N.  Y.  Times.  In  one 
article  it  commends  the  noble  efforts  of  Hugh  McCulloch 
under  Arthur,  and  Manning  under  Cleveland,  to  withdraw  the 
legal  tenders ;  and  wails  thus  at  the  effect  of  their  patriot- 
ism : — But  in  the  country  at  large,  there  was  no  response  to 
these  suggestions,  so  clearly  and  forcibly  sustained.  On  the 
contrary,  they  were  regarded  as  propositions  actually  to  de- 
stroy something  accepted  as  real  money.  Had  Congress  been 
asked  to  sink  $346,000,000  of  gold  or  silver  in  the  bottom  of 
the  sea,  the  proposition  would  not  have  ajDpeared  more 
absurd  to  the  general  mind. 

The  Supreme  Court  has  decided,  on  grounds  that  we  be- 
lieve to  be  logically  unsound,  historically  false,  and  in  econ- 
omy mischievous — that  these  legal  tender  issues  (forced  loans 
in  fact  and  in  effect),  can  be  increased  at  any  moment,  by  any 
amount,  at  the  whim  of  a  chance  majority  in  Congress,  with 
the  consent  of  the  Executive;  or,  if  the  majority  be  two-thirds 
of  a  quorum,  without  that  consent.  Against  this  monstrous 
and  grotesque  theory,  which  is  the  law  of  the  land,  there  is 
absolutely  only  one  defense ;  it  is  to  pay  the  legal-tender 
notes;  and  thus  to  free  the  public  mind  of  familiarity  with 
the  power  whose  exercise  is  allowed. 

'•  Who  make  Lies  their  Refuge." — In  another  article, 
it  commends  Professor  J.  L.  Laughlin(of  Harvard,  I  believe) 
for  his  painstaking  effort  in  the  Quarterly  Journal  of  Econo- 
mies, to  prove  against  all  the  facts — that  the  fall  in  prices  that 
has  taken  place  since  1873,  cannot  be  traced  to  the  scarcity 
of  gold  and  demonetization  of  silver.  Laughlin  funnily  and 
cunningly  slurs  over  the  demonetization  of  silver  ;  and  dwells 
on  the  idea  that  the  supply  of  gold  has  not  greatly  diminished  ; 
that  checks  and  notes  are  more  used,  and  that  manufactures 
have  been  cheapened,  to  explain  the  situation.  He  coolly 
denies  the  well-established  fact  that  prices  of  commodities 
fell  at  least  ^  per  cent,  from  1873  to  1890. 

The  Old,  Old  Story. — The  needless  loaning  of  Govern- 
ment money  to  banks  in  1887,  was  thus  tersely  rebuked  by 
the  N.  Y.  Sun  .— 

Favoring  the  Banks. 

The  Secretary  of  the  Treasury  has  resolved  to  increase 
both   the   number  of  depository  banks   and  the   amount   of 


OUR  MONEY  WARS.  287 

public  money  put  into  their  keeping.  The  maximum  for 
each  bank  is  to  be  $1,100,000,  and  the  security  required  is 
to  be  $1,000,000  in  United  States  four  per  cent,  bonds. 

The  practical  result  of  this  measure  will  be  to  make  a  gift 
to  each  of  the  favored  banks,  of  nearly  the  whole  of  the  in- 
terest on  the  bonds  required  from  it.  The  four  per  cents, 
are  selling  at  125,  and  $1,000,000  of  them  would  cost  $1,250,- 
000.  Supposing  each  depository  bank  to"  purchase  this 
amount  in  bonds,  and  then  receive  $1,100,000  of  public 
money;  its  net  investment  will  be  $150,000;  while  it  will 
draw  the  interest  on  the  full  $1,000,000  of  bonds,  amounting 
to  $40,000  a  year.  Deducting  the  interest  on  the  $150,000 
margin,  its  net  profit  will  be  $34,000  a  year ;  less  a  small 
deduction  for  a  sinking  fund  for  the  premium  on  the  bonds. 

If,  on  the  other  hand,  the  Secretary  should  purchase  the 
bonds  himself, — as  he  has  the  right  to  do  under  the  act  of 
March  3,  1881, — the  people  would  gain  the  interest  instead  of 
the  banks.  It  is  not  pretended  that  any  more  depository 
banks  are  needed  for  the  convenience  of  public  business,  or 
that  any  increase  of  the  money  deposited  with  them  is  re- 
quired. The  Secretary's  scheme  is  purely  one  of  favoritism 
to  the  banks,  at  the  expense  of  the  taxpayers. 

The  Treasury  has  plenty  of  money  to  spare  ;  and  it  should 
be  employed  in  buying  bonds  and  stopping  the  interest  on 
them. 

John  Thompson  said  to  me: — I ,  find  the  following  was 
going  the  rounds  of  the  money-reform  papers  in  1887.  I  am 
of  that  opinion  still. 

"  The  mono-gold  advocates  are  doing  their  best  to  monop- 
olize the  money  of  the  world.     Their  measures  are  admirably 
calculated  to   sweep  into   the  hands   of  the  millionaires  the 
assets  of  the  industrial  classes,  at   very  disastrous  prices. — 
"  John  Thompson,  President 

"Chase  National  Bank,  New  York." 

Stock  Swindles. — A  reform  paper  says  : — In  1887,  an 
Arizona  mine  was  placed  on  the  list  of  the  Stock  Exchange. 
It  was  capitalized  at  five  hundred  thousand  dollars,  in  five 
hundred  thousand  shares  of  one  dollar  each.  It  was  prob- 
ably ■  worth  just  that  amount.  Nevertheless,  by  flaming 
advertisements,  by  lying  opinions  of  experts,  by  the  process 
known  as  "  Washing  ", — that  is,  by  hiring  one  set  of  brokers 
to  buy  and  another  set  of  brokers  to  sell, — the  price  of  shares 


288  OUR  MONEY  WARS. 

was  forced  to  fifteen  times  their  value.  Then,  when  the  pub- 
lic was  safely  trapped,  the  operators  allowed  the  stock  to 
tumble  into  the  cents.  Thousands  were  ruined.  They  were 
nearly  all  people  of  small  means. 

Now,  with  one  exception,  the  people  who  planned  this 
cruel  swindle  were  people  of  the  highest  respectability. 
They  were  church-goers,  deacons,  leading  lights  of  the 
Masonic  fraternity.  They  knew  precisely  what  the  mine 
was  worth  ;  they  prepared  for  the  reception  of  the  experts 
who  visited  it ;  they  saw  that  it  was  properly  "  salted  "  ;  they 
even  tampered  with  the  specimens  which  the  experts  brought 
away.  They  deliberately  set  their  snares  for  waiters,  washer- 
women, elevator-boys,  anybody,  in  short,  who  would  invest 
the  saving  of  a  lifetime  in  their  nefarious  enterprise. 

The  swindle  made  them  rich  ;  and  to-day  they  laugh  at 
those  who  seek  redress  from  them.  One  of  them  had  even 
the  effrontery  to  prosecute  the  unspeakable  Henry  S.  Ives, 
for  schemes  far  less  heartless  and  far  less  successful. 

"  The  case  is  wholly  exceptional,"  Mr.  Clews  would  say. 
Not  at  all. 

If  the  financial  writers  of  the  daily  newspapers  cared  to 
speak  frankly  on  the  subject,  they  would  say  that  there  is 
hardly  a  stock  on  the  list  which  is  not  being  "  manipulated"' 
like  this  Arizona  mine.  There  is  hardly  a  stock  that  is  not 
being  daily  made  the  subject  of  the  "  deal."  And  a  "  deal  " 
is  a  Wall  Street  euphemism  for  a  swindle.  The  dealer  is 
playing  with  marked  cards. 

1888. 

Blaine  Right  this  Time. — The  most  interesting  financial 
matter  in  1888,  outside  of  the  rush  into  trusts  and  syndicates, 
was  the  trick  of  loaning  Government  money  so  largely  to 
banks,  which  was  made  a  double-leaded  outrage  by  Mr. 
Blaine,  because  it  was  done  by  Democratic  secretaries. 
After  a  short  term  as  Secretary,  Mr.  Manning  made  the 
usual  rush  into  bank  presidency,  in  company  with  Jordan 
the  great  gold   borrower  of  the   Treasury. 

In  1888,  Mr.  Blaine  paid  off  the  democrats  for  rattling  his 
friend  Sherman,  by  getting  this  point  on  them.  I  have 
something  more  to  say  on  that  point ;  for  I  have  learned 
something  since  I  spoke  on  it.  Not  only  have  they  taken 
60  million  dollars  and  loaned  it  to  banks  in  the  United 
States ;  but  they  have   done  that  through  the   agency  of  the 


OUR  MONEY  WARS.  289 

bank  established  by  Mr.  Jordan,  and  by  the  late  Mr.  Man- 
ning. They  have  made  them  a  sort  of  Government  bureau  ; 
have  given  them  $1,100,000  as  a  fixed  balance  to  call  their 
own,  and  then  they  have  allowed  them  to  peddle  out  this 
60  millions  to  other  banks  ;  and,  by  that  means,  to  get  a 
large  number  of  banks  throughout  the  country,  to  give  them 
their  entire  business.  And  I  say  here,  that  Louis  XIV.  of 
France,  or  Peter  the  Great  of  Russia,  or  Napoleon,  at  his 
most  absolute  period,  would  never  have  dared  to  treat  the 
Treasury  of  their  respective  countries  in  that  way.     Never  !  " 

The  Sun  said  : — Secretary  of  the  Treasury  Fairchild,  in 
his  Wall  Street  speech  on  Saturday,  tried  to  break  the  force 
of  Mr.  Blaine's  Detroit  argument  against  loaning  the  surplus 
to  the  banks  without  interest.  In  this  attempt,  he  made  use 
of  a  characteristic  Democratic  wriggle. 

Mr.  Blaine  had  estimated  that  a  deposit  of  one  million 
dollars  would  be  worth  $50,000  to  the  depository  in  a  year. 
Secretary  Fairchild,  in  answering  this,  immediately  assumes 
that  the  $910,000  of  bonds  which  he  would  have  required  as 
security  for  the  deposit  would  have  cost  the  bank  a  premium 
of  25  per  cent.,  or  a  total  purchase  price  of  $1,137,500; 
which,  at  five  per  cent.,  would  have  given  the  bank  $56,875 
interest,  even  if  it  had  not  became  a  depository. 

Now,  nobody  knows  better  than  Secretary  Fairchild,  that 
many,  if  not  most  of  the  banks,  that  have  borrowed  the 
Treasury  surplus,  have  used  as  security  the  bonds  on  which 
they  had  been  securing  their  circulation.  They  did  not  have 
to  buy  bonds  at  125  to  offer  as  security  for  the  loan.  They 
simply  retired  their  circulation,  which  was  only  90  per  cent, 
of  the  face  value  of  the  bonds,  and  used  the  same  bonds  to 
borrow  no  percent,  of  their  face  value  on.  A  safe  loan, 
undoubtedly,  when  the  bonds  were  selling  at  125  ;  but  for 
all  that  it  gave  the  banks  20  per  cent,  more  money  to  lend, 
than  they  derived  from  the  use  of  those  bonds  as  security 
for  circulation. 

As  the  bonds  that  have  been  serving  as  security  for  circula- 
tion, were  bought  at  varying  prices,  and  at  different  times 
within  the  past  ten  years,  it  would  have  been  a  good  deal 
fairer  to-  estimate  their  average  cost  at  no  or  115  than  at 
125.  But  it  was  still  more  unfair  to  ignore  this  increase  of 
more  than  20  per  cent,  in  the  principal  of  the  amount  that 
the  banks  were  enabled  to  loan. 
19 


290 


OUR  MONEY  WARS. 


High  Treason. — In  1888  the  Controller  of  the  Currency 
made  a  proposition  that  was  enough  to  make  the  old  departed 
Greenback  leaders  rise  from  the  dead.  It  is  described  by  a 
pseudo-Democratic  paper;  and  Democrats  should  do  some 
hard  thinking,  when  they  reflect  how  far  from  the  doctrines 
of  Jefferson  and  Jackson  their  leaders  are  leading  them,  by 
writing  such  articles  as  the  following  : — The  most  striking 
feature  of  the  report  of  the  Controller  of  the  Currency,  is  his 
recommendation  that  the  Greenbacks  be  funded  in  2)/z  per 
cent,  bonds,  available  only  as  a  basis  for  National  bank  circula- 
tion. This  would,  at  least,  save  the  Government  from  further 
infraction  of  the  constitutional  principle,  against  issuing 
paper  money  in  time  of  peace.  It  is  true  that  the  Supreme 
Court  has  sustained  the  legality  of  reissuing  Greenbacks 
after  they  have  been  redeemed  ;  but,  in  so  doing,  it  did  more 
to  hurt  its  reputation,  than  in  rendering  almost  any  other 
decision  in  its  history.  Perhaps,  if  the  case  were  to  come 
up  before  it  again,  the  result  would  be  different.  There  are 
more  Democrats  on  the  Bench  now. 

A  Poor  Creature. — David  A.  Wells, — who  has  been 
wandering  in  the  Serbonian  bogs  of  false  economics  ever 
since  he  deserted  his  first  master,  Henry  C.  Carey,  to  try 
to  boss  the  Free  Traders, — has,  of  course,  something  to  say 
about  "  the  fall  of  prices  ;  "  and  vents  the  same  sort  of  wisdom 
in  1888  as  Prof.  Laughlin  did  before  him.  The  N.  Y.  Rec- 
ord and  Guide  handles  him  thus  : — The  articles  contributed 
by  David  A.  Wells  to  the  popular  Science  Monthly,  purport- 
ing to  explain  the  causes  of  the  fall  in  prices  since  1872,  are 
about  to  be  republished  in  book  form,  and  will  in  that  shape 
be  very  widely  read.  Mr.  Goschen,  the  British  Chancelor 
of  the  Exchequer,  gave  the  results  of  his  study  of  this  sub- 
ject in  several  well-considered  speeches  a  few  years  back. 
He  attributed  the  rapid  fall  in  prices  to  the  demonetization 
of  silver  by  the  leading  commercial  nations.  Other  causes 
were,  of  course,  at  work  to  depress  values.  But  the  measur- 
ing of  prices  by  one  instead  of  two  metals  was  sufficient  to 
account,  in  his  estimation,  for  the  depression  of  industries 
the  world  over.  Mr.  Wells'  contention,  however,  is,  that  the 
adoption  of  the  gold  unit  has  nothing  to  do  with  prices.  It 
is  true  these  have  fallen  in  a  most  remarkable  way  ;  but,  ac- 
cording to  Mr.  Wells,  it  is  because  of  improvements  in 
machinery,  new   inventions,  increased  production,  and   an 


OUR  MONEY  WARS.  291 

extension  of  steam  transportation  to  distant  regions  ;  thus 
utilizing  the  products  of  the  earth  in  a  way  that  would  not 
have  been  possible  twenty  years  ago. 

The  Financial  Chronicle,  however,  takes  Mr.  Wells  to  task, 
and  shows  that  the  figures  and  facts  he  gives  are  fallacious. 
He  picks  on  the  wrong  years  with  which  to  make  compari- 
sons; and,  in  the  case  of  wheat  and  cotton,  for  instance,  the 
facts  lead  to  the  very  opposite  conclusion  to  that  he  draws  from 
them.  Mr.  Wells  is,  however,  a  doctrinaire  of  the  most  pro- 
nounced type.  It  is  quite  evident  from  the  tone  of  his 
articles,  that  he  cares  less  about  getting  at  the  facts,  than  he 
does  about  using  them  to  establish  a  foregone  conclusion. 

In  a  Nutshell. — I  venture  to  say  that  nowhere  in  writ- 
ings upon  economics,  is  there  a  more  pregnant  paragraph 
than  the  following.  It  gives  proof  positive,  from  all  sorts  of 
economists,  that  demonetization  of  silver  has  caused, — all 
through  the  civilized  world, — a  fall  in  the  values  of  the  great 
human  products  (except  that  one  selected  fpr  petting — gold) 
of  at  least  33  per  cent.     Read  and  be  convinced  : — 

The  Economist  of  London  gives  prices  in  1873  at  134  ;  in 
1888  at  1 01,  a  decline  of  ^  per  cent.  Dr.  Soetbeer  gives 
in  1873,  13S  ;  in  1887,  103,  a  fall  of  35.  Mr.  Palgrave  gives 
in  1873,  104;  in  1SS7,  73,  a  fall  of  31.  Mr.  Sauerbeck 
gives  in  1873,  in  ;  in  1S87,  68,  a  fall  of  33  per  cent.  Mr. 
Giffm  gives  prices  of  British  exports  in  1S73  at  132  ;  in  1886, 
82,  a  fall  of  50  per  cent.  The  same  author  gives  British  im- 
ports in  1873  at  107  ;  in  1886,  74,  a  fall  in  prices  of  n  Per 
cent. 

Most,  if  not  all,  of  these  statisticians  are  advocates  of  the 
gold  standard.  Their,  figures  cannot  be  claimed  as  having 
been  brought  forward  by  silver  advocates. 

1889. 

"  Fair  Gambles." — There  is  increasing  talk  and  action  in 
connection  with  trusts  this  year.  "  Matthew  Marshall  ",  who 
succeeded  the  late  "  Rigolo  "  in  writing  the  N.  Y.  Times' 
Monday  article  on  "  Finance  ",  gives  a  lucid  article  on  trust 
stocks'from  his  stand-point,  that  of  a  mere  sharp  money-maker 
and  seeker.  He  makes  no  complaint  against  trusts — says  that 
they  are  all  right  and  inevitable.  They  are  blind  pools;  and 
he  won't  invest  in  them,  because  they  make  no  clear  reports, 


292 


OUR  MONEY  WARS. 


Like  a  fly-wheel,  they  equalize  the  motion  of  the  industries 
they  control.     He  concludes  : — 

Of  the  liability  of  these  trusts  to  injury  from  hostile  legisla- 
tion I  do  not  make  much  account.  If  the  Western  Union 
Telegraph  Company  can,  without  interference,  own  all  the 
telegraph  lines  in  the  country  ;  and  the  Standard  Oil  Trust 
all  the  petroleum  wells  and  refineries  ;  I  do  not  see  why 
other  combinations,  of  a  similar  nature,  should  not  find  a 
way  to  carry  on  their  business  with  equal  impunity.  Of 
course,  laws  may  be  made  and  lawsuits  may  be  begun,  which, 
for  a  while,  will  be  troublesome  and  even  embarrassing  ;  but, 
sooner  or  later,  the  ingenuity  of  skillful  lawyers  will  circum- 
vent all  obstacles,  as  the  water  of  a  brook  finds  a  course  past 
all  the  stones  that  may  be  heaped  in  its  bed.  So  long  as 
partnerships  and  corporations  are  permitted,  there  can  be 
no  prevention  of  trusts,  and  partnerships  and  corporations 
cannot  be  prohibited  without  putting  a  stop  to  all  enterprises 
which  require  large  amounts  of  capital.  This  objection  to 
investing  in  trust  stocks  is,  therefore,  entitled  to  little  or  no 
weight. 

On  the  whole,  I  am  inclined  to  regard  industrial  trust 
stocks  as  fair  Gambles,  for  those  who  can  afford  to  risk 
their  money  in  them  ;  but  not  as  sound  investments  for 
people  out  of  business.  Probably,  after  a  while,  time 
will  so  consolidate  and  strengthen  the  best  of  them,  and  so 
much  may  become  known  of  their  affairs,  that  even  cautious 
buyers  may  be  induced  to  regard  them  with  favor.  But 
they  have  not  reached  this  state  yet. 

Abundant  Silver  helps  Producers. — Senator  Jones  gives 
this,  in  1890,  in  rebuttal  of  the  statement  that  remonetization 
of  silver  would  only  profit  the  mineral  states.  Of  course 
abundance  of  paper  money  would  have  the  same  effect  as 
abundance  of  coin:  "The  price  of  cotton  for  the  year 
1873,  in  gold  or  silver  (then  of  equal  power),  was  16.4  cents 
per  pound.  The  price  in  1889  was  9.9  cents.  The  yield 
of  cotton  for  1889  was  7,000,000  bales,  or  3,500,000,000 
pounds.  Had  not  silver  been  demonetized  that  cotton  would 
have  brought  as  good  a  price  to-day  as  it  did  in  1873.  At 
the  price  of  1S73,  the  account  would  have  stood  3,500,000,- 
000  pounds,  at  16. 4  cents,  $574,000,000.  At  the  price  of 
1889  the  account  stands  3,500,000,000  pounds,  at  9.9  cents, 
$345,500,000  ;  showing  a  loss  in  debt-paying  and  tax-paying 


OUR  MONEY  WARS. 


293 


power  on  cotton  alone  (only  one  article  of  merchandise)  in 
the  single  year  1889, — by  reason  of  the  fall  in  prices  caused  by 
the  demonetization  of  silver,  of  $227,500,000.  Having  shown 
that  the  loss  to  the  silver  miners  by  the  discount  on  silver, 
for  the  seventeen  years  from  1873  to  1889,  was  less  than 
$130,000,000 ;  it  will  be  seen  that  the  loss  in  one  single 
year  to  the  cotton  planters  of  the  United  States  is  greater, 
by  $90,000,000,  than  the  total  loss  for  the  entire  seventeen 
years  to  the  silver  miners  of  the  country. 

"  A  like  computation  with  regard  to  wheat,  will  show  a  loss 
in  debt-paying  and  tax-paying  power  of  not  less  than  $1,000,- 
000,  a  year  to  the  farmers  of  the  north  and  west ;  [much 
more. — S.  L.]  by  reason  of  the  demonetization  of  silver — a 
total  of  $1,700,000,000  in  the  article  of  wheat  alone  in  seven- 
teen   years."  1890. 

From  Mr.  George  O.  Jones'  chart  I  clip  the  following 
paragraph,  which  shows  the  true  relative  interests  of  silver 
miners  and  other  producers  : — 

The  Director  of  the  Mint  reports  our  present  production 
of  silver  at  about  52,000,000  ounces  a  year,  or  at  the  rate  of 
520,000,000  ounces  in  ten  years.  Twenty-five  cents  per 
ounce  loss  on  these  amounts  would  be  $13,000,000  a  year,  or 
$130,000,000  in  ten  years,  leaving  the  account  as  between 
American  farmers  and  American  silver  kings  as  follows  : 

Relative  value  of  certain  American  farm  products,  compared 
with  the  value  of  all  silver  produced  in  this  country,  when 
silver  is  selling  at  par  with  gold  : 


Products. 

Per  year. 

Ten  years. 

Wheat 

$  390,000,000 
495,000,000 
712,000,000 
920,000,000 

$   3,900,000,000 
4,950,000,000 
7,120,000,000 
9,200,000,000 

Corn 

Oats  and  dairy  products.  . 

Total 

Silver  total 

$2,5 17,000,000  $  25,170,000,000 
52,000,000          520,000,000 

Difference 

$2,465,000,000 

$  24,650,000,000 

Loss  on  the  above-named  farm  products,  caused  by  a  de- 


294  0UR  MONEY  WARS. 

cline  of  25  cents  per  ounce  on  the  p'rice  of  silver,  compared 
with  a  like  decline  on  all  silver  produced  in  this  country  : 

Products.  Per  year.  Ten  years. 

On      the     farm      products 

named $637,000,000  $6,370,000,000 

On  all  silver 13,000,000  130,000,000 

Difference |   $624,000,000!  $6,240,000,000 

The  above  table  shows  that  the  American  farmers,  in  the 
last  ten  years,  have  lost,  by  the  demonetization  act,  nearly 
fifty  times  as  much  as  the  American  silver  miners. 

Government  Loans  on  Land-;  and  Goods. — 1890  shows 
a  great  extension  of  the  demand  in  the  West  and  South  for 
these  loans.  The  following  from  a  book  called,  "  The  Three 
Americas,"  published  in  1890,  has  this  : — It  is  not  uninter- 
esting, in  this  connection,  to  state  an  instructive  fact  touch- 
ing the  subject  of  Government  loans,  or  loans  guaranteed  by 
Government,  to  Brazilian  coffee  planters.  Under  the  recent 
Curo  Preto  ministry,  the  sum  of  100  contos  of  reis  (about 
$54,500,000),  in  aid  of  the  agricultural  interests,  was  lent  to 
farmers  through  the  banks.  The  statement  is  made,  in  the 
first  annual  report  of  the  minister  of  finance,  issued  De- 
cember 31,  1889,  that  this  sum  has  to  be  spent  during  the 
various  terms ;  the  Government  having  authorization  to  sus- 
pend such  contracts  if  judged  to  be  useless.  It  is  the 
opinion  in  Brazil, — among  that  very  enlightened  people,  the 
descendants  of  one  of  the  oldest  and  most  refined  of  European 
nationalities, — that  the  Government  will  not  lose  the  interest,  if 
the  farmers  derive  no  result  from  it ;  as  on  the  contrary,  the 
interest  will  cuter  the  coffers  of  the  Treasury,  under  the  form 
of  importation  and  exportation  taxes  on  agricultural  products  ; 
of  lands  whose  taxable  value  is  enhanced  by  the  loans.  Our 
statesmen  must  go  to  France  and  brazil  ;  not  England,  to 
learn  financial  wisdom.  Yet  England,  by  act  of  parliament, 
has  aided  Irish  farmers  to  the  amount  of  ^50,000,000. 
Prussia  has  made  the  same  salutary  experiment;  and  the 
state  of  New  Jersey  is  not  without  a  beneficent  precedent. 
The  class  which  feeds  and  clothes  mankind,  is  of  all  others, 
the  most  entitled  to  the  fostering  care  of  Government.  In 
the  United  States  it  has  ever  received  the  least  consideration. 


OUR  MONEY   WARS.  295 

In  them  now  reposes  the  power  to  enforce  attention  to  their 
necessities.  "  They  know  what  they  want  and  are  going  to 
have  it." 

Ratio  of  Silver  to  Gold. — Senator  Jones,  in  1S90,  had 
a  computation  made  of  the  alleged  ratios  of  gold  and  silver 
from  the  foundation  of  society,  and  the  beginning  of  history. 
Much  of  it  is  fanciful.  But  the  general  tenor  seems  to  bear 
out  his  claim  that  the  ratios  have  ranged,  wherever  appar- 
ent, from  1  to  10  to  1  to  16.  A  great  part  of  the  record  is  1 
to  10.  His  data  from  1873  to  1889,  are  strictly  reliable,  and 
quite  significant.     Here  they  are  : — 

Table  showing  the  ratio  of  silver  to  one  of  gold  since  the 
demonetization  of  silver  by  Germany  and  the  United  States, 
and  the  closing  of  all  mints  of  the  Western  World  to  its  free 
coinage  : 
1873 15.72  1882    18.19 


1883 18.64 

1884 18.57 

1885 .  .    19-41 

1886    20.78 

1887 21.13 

1888 21.99 

1889 22.10 


1874 16.17 

1875 •• 16.59 

1876 17.88 

1877 17.22 

1878 17.94 

1879 18.40 

1880 18.05 

1881 18.16 

The  Sun  Inconsistent. — The  following  from  the  N.  Y. 
Sun,  in  1S89,  is  probably  to  corroborate  what  I  lately  quoted 
from  that  paper  about  Gould's  being  "a  great  man  "  : — 

The  growth  of  the  Missouri  Pacific  under  Mr.  Gould's 
management  is  shown  by  the  fact  that,  in  1880,  the  gross 
earnings  from  879  miles  of  road  were  $4, 161,671,  and  in 
1888  the  gross  from  161 1  miles  was  about  $6,000,000.  The 
increase  of  business  has  come  chiefly  from  the  Texas  lines  ; 
as  the  Missouri  Pacific  has  taken  it  away  from  the  upper 
portions  of  the  road,  especially  in  Kansas.  There  is  this  to 
be  said  about  a  property  or  corporation  that  becomes  bank- 
rupt in  Mr.  Gould's  hands  ;  as,  in  fact,  nearly  every  property 
he  manages  does  ;  that  the  wreck  he  leaves  is  so  complete 
that  reorganization  is  most  difficult.  The  Wabash  furnishes 
irrefutable  evidence  of  this  statement ;  and  the  Missouri, 
Kansas  and  Texas  will  supply  additional  proof.  The  con- 
cern has  been  insolvent  for  nearly  a  year,  yet  very  little 
progress  has  been  made  toward  improving  its  affairs.     A 


296  OUR  MONEY  WARS. 

good  deal  of  investigation  has  been  done  ;  but  as  yet  no  one 
has  been  able  to  furnish  the  actual  dimensions  of  the  hole 
that  Mr.  Gould  has  made  in  the  property.  The  foreign 
security  holders  have,  according  to  all  accounts,  been  sys- 
tematically misinformed  as  to  the  condition  and  value  of  the 
property ;  and  each  interest  has,  if  anything,  become  more 
self-sufficient  and  determined  to  have  its  own  way.  In  the 
meantime,  disinterested  receivers  are  demonstrating  what  the 
property  can  earn. 

Trust  Company  Profits. — In  the  following,  from  that 
reliable  statistician,  Marshall  of  the  Sun,  we  catch  a  glimpse 
of  how  such  palaces  as  that  of  the  Union  Trust  Co.  can  be 
built.  That  company  failed  in  1S73  : — The  expenses,  also, 
of  a  bank,  for  rent  and  salaries,  are  immensely  greater,  in 
proportion  to  its  profits,  than  those  of  a  trust  company; 
while  a  trust  company  has  sources  of  income — from  commis- 
sions for  accepting  and  executing  mortgages  and  other  trusts 
— which  are  denied  to  a  bank.  The  usual  fee  for  accepting 
a  railroad  mortgage  trust  is  one  dollar  per  $1,000  bond  ;  so 
that  on  a  10  million  mortgage,  it  amounts  to  $10,000.  Be- 
sides this  when  a  trust  company  acts  as  agent  for  the  re- 
organization committee  of  a  bankrupt  railroad  company, — 
and  advances  the  cash  needed  to  facilitate  the  operation, — it 
charges  a  commission,  as  well  as  six  per  cent,  interest  on  the 
money.  These  profits  count  up  rapidly  :  so  that  I  can  well 
believe  the  story  that  the  Central  Trust  Company  made,  in 
this  way,  $So,ooo  in  one  month,  last  year. 


fn  his  speech  in  the  Senate,  before  the  Silver  Bill  was 
passed,  Mr.  Jones  said  : — ■ 

I  will  read  a  cable  dispatch  recently  addressed  to  me  by 
Mr.  Henry  H.  Gibbs,  formerly  governor  of  the  Bank  of  Eng- 
land, and  now  president  of  the  bimetallic  league,  of  Great 
Britain  : 

"  London,  May  6. — The  friends  of  silver  deeply  regret  the 
death  of  Senator  Beck,  whose  services  in  the  cause  of 
monetary  reform  are  most  warmly  appreciated  on  this  side 
of  the  Atlantic.  The  bimetallist  party  of  the  United  King- 
dom now  including  over  100  members  of  the  House  of  Com- 
mons, attach  the  greatest  value  to  the  debate  about  to  com- 
mence in  your  illustrious  chamber.  We  fully  recognize  not 
only  that  the  support  afforded  to  silver  by  your  legislation, 


OUR  MONEY  WARS.  297 

during  the  last  twelve  years,  has  helped  to  protect  the  in- 
dustrial world  from  an  acute  monetary  crisis  ;  but  also  that 
the  debates  in  Congress  have  served,  more  than  all  else,  to 
educate  our  people  to  recognition  of  the  important  issues 
involved.  We  believe  also  that  the  increase  and  coinage  of 
silver  contemplated  by  Congress  will  restore,  wholly  or  con- 
siderably, your  coinage  rates  ;  and  will  thus  make  interna- 
tional settlement  of  this  complex  question  comparatively  easy. 
We  anticipate  further,  and  with  much  confidence,  that  the 
advance  in  the  price  of  silver  which  must  follow  your  action, 
will  stimulate  both  the  export  and  the  other  trades  of  ypur 
country  ;  and,  while  tending  to  the  prosperity  of  your  agricul- 
tural classes,  will  also  assist  the  manufacturing  industries 
of  the  United  Kingdom,  and  the  whole  body  of  our  wage- 
earners." 

Mr.  Moreton  Frewen,  of  London,  an  able  writer  on  eco- 
nomic subjects,  whose  recent  work  on  "  The  Economic 
Crisis  v  I  commend  to  the  careful  perusal  of  senators,  says  : 

"  It  may,  indeed,  be  affirmed,  without  fear  of  contradiction, 
that  legislation  arranged  in  the  interest  of  a  certain  class, 
first  by  Lord  Liverpool  in  this  country,  and  again  by  Sir 
Robert  Peel  at  the  instigation  of  Mr.  Jones  Loyd  and  other 
wealthy  bankers, — which  was  supplemented  recently  by  simul- 
taneous anti-silver  legislation  in  Berlin  and  Washington,  at 
the  instance  of  the  great  financial  houses, — this  legislation 
has  about  doubled  the  burden  of  all  national  debts,  by  an 
artificial  enhancement  of  the  value  of  money. 

"  The  fall  of  all  prices  induced  by  this  cause,  has  been  on 
such  a  scale  that,  while  in  twenty  years  the  national  debt  of 
the  United  States,  quoted  in  dollars,  has  been  reduced  by 
nearly  two-thirds  ;  yet  the  value  of  the  remaining  one-third, 
measured  in  wheat,  in  bar  iron,  or  bales  of  cotton,  is  consid- 
erably greater — is  a  greater  demand  draft  on  the  labor  and 
industry  of  the  nation,  than  was  the  whole  debt  at  the  time 
it  was  contracted.  The  aggravation  of  the  burdens  of  taxa- 
tion induced  by  this  so-called  'appreciation  of  gold  ',  which 
is  no  natural  appreciation,  but  has  been  brought  about  by 
class  legislation,  to  increase  the  value  of  the  gold  which  is  in 
a  few  hands  ;  requires  but  to  be  explained  to  an  enfranchised 
democracy  ;  which  will  know  how  to  protect  itself  against 
further  attempts  to  contract  the  currency  ;  and  to  force  down 
prices  to  the  confusion  of  every  existing  contract. 


298  OUR  MONEY  WARS. 

"  Of  all  classes  of  middle-men,  bankers  have  been  by  far 
the  most  successful  in  intercepting  and  appropriating  an 
undue  share  of  produced  wealth.  While  the  modern  system 
of  banking  and  credit  may  be  said  to  be  even  yet  in  its 
infancy  ;  that  portion  of  the  assets  of  the  community  which 
is  to-day  in  the  strong  boxes  of  the  bankers  would,  if  declared, 
be  an  astounding  revelation  of  the  recent  profits  of  this 
particular  business.  And  not  only  has  the  business  itself 
become  a  most  profitable  monopoly ;  but  its  interests,  in  a 
very  few  hands,  are  diametrically  opposed  to  the  general 
interests  of  the  majority.  By  legislation  intended  to  contract 
the  currency  and  force  down  all  prices, — including  wages, 
the  price  paid  for  labor, — the  money  owner  has  been  able  to 
increase  the  purchase  power  of  his  sovereign  or  dollar,  by  the 
direct  diminution  of  the  price  of  every  kind  of  property 
measured  in  money." 


Mark  the  words  of  the  British  Chancelor,  April  18,  1890. 
Even  the  Britons  sometimes  realize  the  gold  slavery.  The 
Chancelor  of  the  Exchequer,  said  in  the  House  of  Com- 
mons : — I  admit  that,  as  interested  in  the  commerce  and  mon- 
etary system  of  this  country ;  I  feel  a  kind  of  shame  that 
on  the  occasion  of  ^2,000,000  or  ,£3,000,000  of  gold  being 
taken  from  this  country  to  Brazil, — or  any  other  country, — 
it  should  immediately  have  the  effect  of  causing  a  monetary 
alarm  throughout  the  country. 

Silver  Bugaboos. — The  following  extracts  from  the  speech 
of  Senator  Teller,  of  May  14  and  15,  1890,  in  the  U.  S. 
Senate,  are  very  pertinent  to  the  silver  excitement.  Speaking 
of  the  Windom  Bill  he  said : 

P.  7  : — Mr.  President,  that  scheme,  as  I  said,  met  the 
approval  of  the  gold  monometallists  everywhere.  I  have 
found  one  thing  pretty  safe,  in  my  practical  life  :  that  when 
my  enemies  want  to  do  a  particular  thing  and  are  anxious 
for  it,  look  out.  When  I  found  all  the  monometallists  every- 
where singing  praises  to  this  bill ;  when  I  found  the  press 
that  had  been  denouncing  silver,  and  denouncing  every  man 
who  supported  the  free  coinage  or  even  the  limited  use  of 
silver  under  the"  Bland  bill  as  money  supporting  it,  and  all 
gold  monometallists  clapping  their  hands  in  glee  over  the 
prospect  of  this  bill  becoming  a  law, — then  I  had  reason  to 


OUR  MONEY  WARS.  299 

suspect  that  it  was  a  Trojan  horse.  It  was  pretty  certain,  in 
a  week,  or  I  will  say  in  a  month,  it  was  morally  certain  that 
that  scheme  could  not  succeed. 

P.  15  : — There  has  never  been  a  Secretary  of  the  Treas- 
ury— except  it  might  have  been  a  few  months  when  some- 
body was  accidentally  there, — but  there  has  been  no  man  in 
charge  of  that  Department  for  any  considerable  length  of 
time,  who  has  not  been  determined  that  silver  should  not 
go  to  par;  and  anything  that  would  put  it  to  par  he  was 
opposed  to. 

P.  16  : — They  said  we  were  threatened  with  the  increased 
mintage  of  silver  ;  with  such  a  redundancy  of  silver  certifi- 
cates that  the  people  would  not  want  them,  and  they  would 
come  into  the  Treasury  in  payment  of  duties  on  imports, 
and  the  Government  would  have  no  gold  with  which  to  meet 
•its  obligations.  Let  us  see  how  much  we  have  received  since 
1887.     That  is,  as  far  as  I  have  got  the  statement. 

In  January,  18S7,  there  were  16.2  per  cent,  of  silver  certi- 
ficates ;  in  February,  10.1  ;  in  March,  11.4.  These  are  the 
silver  certificates  paid  in  for  duties  on  imports  that  thus 
found  their  way  back  to  the  Treasury.  In  July,  1888,  these 
fell  to  8.3  percent.;  in  August,  to  5.5  percent.;  in  September, 
to  4.4  per  cent.;  in  October,  to  3.6  per  cent.;  in  November,  to 
5.4  percent.;  in  January,  1889,  to  6.2  per  cent.;  in  February, 
to  5.3  per  cent.;  and  in  April,  1890,  to  1.6  per  cent. 

.  The  certificates  are  redeemable,  according  to  this  bill,  in 
lawful  money.  They  are  not  legal  tender  ;  they  cannot  per- 
form the  highest  money  duty;  they  cannot  discharge  debts. 
"  Oh,"  it  is  said,  "  everybody  will  take  them."  Mr.  Presi- 
dent, everybody  will  take  them  when  they  do  not  need  the 
legal-tender  quality;  everybody  will  take  them  when  busi- 
ness is  all  right.  But  what  you  need  the  legal-tender  quality 
for  is  the  time  of  distress,  of  financial  convulsions  and 
panics. 

I  have  heard  it  said  recently  that  there  has  been  no  trouble 
about  legal  tenders.  We  people  of  the  West  know  better. 
I  have  seen  in  the  State  in  which  I  live  telegrams  to  send 
legal  tender  from  Omaha  by  special  train  to  Denver  more 
than  once.  I  know  two  parties  left  New  York  with  the  legal 
tenders  for  the  city  of  Denver  in  1873,  to  meet  demands  for 
legal  tender  during  the  panic  of  that  year.  Why  should  this 
not   be  legal  tender  for  all  parts  of  the    country  ?     These 


300  OUR  MONEY  WARS. 

notes  are  practically  legal  tender  for  New  York  City,  for 
Philadelphia,  and  for  the  city  of  Washington  ;  because  they 
have  a  Government  agency  with  money  stored,  of  a  legal- 
tender  character,  to  which  they  can  go  and  exchange  their 
certificates  for  legal  tenders ;  but  in  the  city  of  Denver,  in  the 
city  of  Omaha,  in  Kansas  City,  no  man  can  exchange  these 
certificates  for  legal  tenders  ;  and  if  he  wants  legal  tenders, 
he  is  at  the  mercy  of  banks  that  have  them.  Or,  more  likely, 
the  banks  will  not  have  them  ;  and  he  is  at  the  mercy  of  his 
creditors. 

P.  30  : — If  there  is  this  great  store-house  of  silver  some- 
where, why  has  it  not  gone  to  India?  Why  is  it  that  India 
takes  less  silver  now  than  she  took  years  ago  ?  India  from 
1856  to  1870  took  more  than  the  entire  production  of  the 
world  of  silver.  She  took  last  year  $46,000,000  of  silver. 
She  has  taken  on  an  average  for  the  last  six  years  $35,000,000 
of  silver.  Now,  the  mints  are  open,  India  is  full  of  goods, 
India  is  full  of  everything  that  people  want.  Why  has  not 
all  the  silver  of  the  world  found  its  way  into  India  to  be 
coined  ?  The  mints  of  Mexico  are  open,  the  mints  of  Japan 
are  open  ;  and  they  have  been  open  all  the  time,  for  silver, 
in  Mexico,  at  a  little  more  than  our  ratio  ;  and  in  Japan  at 
still  a  little  more  than  that ;  and  now  even  China  has  opened 
her  mints  to  the  silver  of  the  world. 


The  Silver  Bill  of  July  14. — After  many  weeks  of 
wrangling,  this  is  the  bill  that  finally  passed  : — 

An  Act  directing  the  Purchase  of  Silver  Bullion  and  the  Issue  of  Treas- 
ury notes  thereon,  and  for  Other  Purposes. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the 
United  States  of  America  in  Congress  assembled,  That  the 
Secretary  of  the  Treasury  is  hereby  directed  to  purchase, 
from  time  to  time,  silver  bullion  to  the  aggregate  amount  of 
four  million  five  hundred  thousand  ounces,  or  so  much  there- 
of as  may  be  offered  in  each  month,  at  the  market  price 
thereof,  not  exceeding  one  dollar  for  three  hundred  and 
seventy-one  and  twenty-five  hundredths  grains  of  pure  silver  ; 
and  to  issue,  in  payment  for  such  purchases  of  silver  bullion, 
Treasury  notes  of  the  United  States  to  be  prepared  by  the 
Secretary  of  the  Treasury,  in  such  form  and  of  such  denomi- 
nations, not  less  than  one  dollar  nor  more  than  one  thousand 


OUR  MO XI;  Y  WANS.  301 

dollars,  as  he  may  prescribe ;  and  a  sum  sufficient  to  carry 
into  effect  the  provisions  of  this  act  is  hereby  appropriated 
out  of  any"  money  in  the  Treasury  not  otherwise  appro- 
priated. 

Sec.  2.  That  the  Treasury  notes  issued  in  accordance  with 
the  provisions  of  this  act  shall  be  redeemable  on  demand,  in 
coin,  at  the  Treasury  of  the  United  States,  or  at  the  office  of 
any  assistant  treasurer  of  the  United  States,  and  when  so 
redeemed  may  be  reissued  ;  but  no  greater  or  less  amount  of 
such  notes  shall  be  outstanding  at  any  time  than  the  cost  of 
the  silver  bullion  and  the  standard  silver  dollars  coined  there- 
from, then  held  in  the  Treasury  purchased  by  such  notes  ;  and 
such  Treasury  notes  shall  be  a  legal  tender  in  payment  of  all 
debts,  public  and  private,  except  where  otherwise  expressly 
stipulated  in  the  contract,  and  shall  be  receivable  for  customs, 
•taxes,  and  all  public  dues,  and  when  so  received  may  be  re- 
issued ;  and  such  notes,  when  held  by  any  National  banking 
association,  may  be  counted  as  a  part  of  its  lawful  reserve. 
That  upon  demand  of  the  holder  of  any  of  the  Treasury 
notes  herein  provided  for  the  Secretary  of  the  Treasury  shall, 
under  such  regulations  as  he  may  prescribe,  redeem  such 
notes  in  gold  or  silver  coin,  at  his  discretion  ;  it  being  the 
established  policy  of  the  United  States  to  maintain  the  two 
metals  on  a  parity  with  each  other  upon  the  present  legal- 
ratio,  or  such  ratio  as  may  be  provided  by  law. 

Sec.  3.  That  the  Secretary  of  the  Treasury  shall  each 
month  coin  two  million  ounces  of  the  silver  bullion  purchased 
under  the  provisions  of  this  act  into  standard  silver  dollars, 
until  the  first  day  of  July  eighteen  hundred  and  ninety-one  ; 
and  after  that  time  he  shall  coin  of  the  silver  bullion  pur 
chased  under  the  provisions  of  this  act  as  much  as  may  be 
necessary  to  provide  for  the  redemption  of  the  Treasury 
notes  herein  provided  for  ;  and  any  gain  or  seigniorage  arising 
from  such  coinage  shall  be  accounted  for  and  paid  into  the 
Treasury. 

Sec.  4.  That  the  silver  bullion  purchased  under  the  provi- 
sions of  this  act,  shall  be  subject  to  the  requirements  of  exist- 
ing law  and  the  regulations  of  the  mint  service  governing  the 
methods  of  determining  the  amount  of  pure  silver  contained, 
and  the  amount  of  charges  or  deductions,  if  any,  to  be 
made. 

In  an  article  on  "  Exchange  with  India,"  in    Blackwood's 


302  OUR  MONEY  WARS. 

Magazine,  for  July,  1890,  Lt.-General  Gray  says  :  "  Experts 
and  scientists  on  currency  are  too  apt  unconsciously,  from  the 
peculiar  tendency  of  minds  so  exclusively  employed  and 
trained,  to  evolve  from  an  irresistible  inner  current  of 
thought,  a  state  of  chaos  of  the  subject-matter  taken  up  and 
dealt  with  by  them,  agreeable  to  individual  prepossessions." 

Pensions  Furnish  Currency. — It  has  been  well  said,  in 
1S90,  that  but  for  the  pensions,  large  parts  of  the  United  States 
would  be  vastly  more  destitute  of  currency  than  they  now 
are.  Ben  Colvin,  a  Western  Reformer,  said  : — I  would  ask 
what  would  the  people  do  if  it  were  not  for  the  pensions  the 
poor  soldiers  get  ?  Can  the  National  banks  answer?  This 
condition  of  pensioning  must  gradually  leave  us ;  probably 
in  a  few  years  it  will  all  be  gone.  Then  what  will  we  do  for 
money  ?  I  suppose  borrow  of  the  banks,  and  thus  increase 
usury  and  consequent  slavery.  About  $100,000,000  are  now 
paid  annually  for  pensions  ;  if  it  were  not  for  that  what  would 
the  people  do  ?  It  certainly  is  a  condition  that  confronts 
us.  Where  would  be  our  circulating  medium  ?  We  should 
do  all  we  could  to  keep  the  soldiers  alive ;  for  when  they  all 
die  our  hopes  of  a  circulating  medium  will  be  buried  with 
them.  You  take  $100,000,000  from  the  business  of  this 
country  annually  and  the  people  are  ruined,  under  the 
present  financial  system. 

Jones  on  Intrinsic  Value. — This  report  of  an  interview 
with  .  Senator  Jones  by  "  Ben  Abou  "  of  the  N.  Y.'Press, 
August  5,  1890,  is  very  significant,  coming  from  the  man  who 
is  now  "  on  top  "  in  currency  discussions  :  I  think  him  in 
error  about  the  imbecility  of  the  Farmers'  Alliance  : — 

Senator  Jones  of  Nevada  represents  a  constituency  which 
has  so  little  of  the  farming  element  in  it,  that  he  can  look 
witli  complacency  on  the  rise  of  the'Farmers'  Alliance;  and, 
like  a  man  up  a  tree,  watch  it  from  the  purely  indifferent 
standpoint.  I  was  chatting  with  him  a  day  or  two  since, 
when  he  remarked  that  he  thought  the  farmers  might  secure 
twenty  or  thirty  or  even  forty  Alliance  members  in  the  next 
Congress.  "Then  the  end  of  the  movement  will  come," 
said  he,  "  because  when  they  are  there  they  will  have 
nothing  for  which  they  can  unitedly  ask,  or  which  they 
will  demand  to  have  done  that  is  not  now  being  done. 
The  part  of  their  movement  on  which  I  look  with  most 
interest  is  their   demand  for  the  issuance  of  money  upon 


OUR  MONEY  WARS.  303 

products — corn,  wheat,  oats,  etc.  It  is  going  to  make  the 
men  who  have  been  crying  for  years  that  money  must 
have  intrinsic  value  take  a  new  view  of  things.  If  the  gold 
men  are  right,  then  the  farmers  are  right.  There  is  more 
intrinsic  value  in  wheat,  corn  and  oats  than  in  gold  ;  because 
these  products  supply  and  sustain  life,  whereas  gold  will  not. 
If  it  was  left  to  a  man's  choice  to  take  wheat  or  gold  on 
which  to  subsist  for  a  number  of  years  on  a  barren  island, 
how  quickly  he  would  choose  the  wheat !  But,  while  it  will 
awaken  the  gold  men  to  the  foolishness  of  their  position,  in 
reference  to  what  money  should  be,  it  will  awaken  intelli- 
gent discussion  and  understanding  of  the  real  basis  of  money, 
which  should  be  quantitative.  No  matter  what  the  medium 
of  exchange  between  the  people,  it  is  patent  that  if  popula- 
tion increases  three  per  cent,  or  five  per  cent,  it  will  require 
three  per  cent,  or  five  per  cent,  more  money  to  effect  ex- 
changes,— that  is,  to  transact  business  among  the  people, — if 
the  money  condition  is  to  remain  unchanged.  This  is  why  I 
and  many  others  believe  that  the  medium  of  exchange,  once 
decided  upon,  may  be  anything  which  the  Government 
selects,  and  gives  the  name  of  money  ;  and  its  value  will  al- 
ways be  relatively  determined  by  the  ratio  of  its  units  to  the 
population  and  the  demands  put  upon  it." 

Beecher's  Deacon  White. — That  sharp,  jolly  Wall  Street 
speculator,  S.  V.  White,  let  off  an  unusual  quantity  of  truth, 
for  a  Wall  Street  man,  one  day  in  August,  1890,  as  follows  : — 

You  men  of  the  Fifty-first  Congress  have  builded  better 
than  you  knew :  and  better  than  you  dared  to  hope  for. 
Cereals  are  up,  and  men  say  it  is  because  of  a  short  crop  in 
the  world.  For  myself  I  do  not  think  so.  There  is  no  sur- 
plus crop  ;  but  counting  the  surplus  of  past  years  there  is  an 
abundant  supply.  Cereals  are  up,  in  my  humble  judgment, 
in  a  large  measure  because  of  the  beneficial  results  of  the 
silver  legislation  of  the  Fifty-first  Congress.  When  this  ses- 
sion convened,  the  Mark  Lane  grain  dealer  bought  his  wheat 
in  India,  where  they  have  the  misfortune  to  have  a  mono-me- 
tallic circulating  medium,  which  happens  to  be  silver.  At 
the  same  time  that  he  bought  wheat  in  India,  he  bought 
silver' in  America  at  92^/3  cents  per  ounce;  and  paid  for  In- 
dian wheat  with  silver  rated  at  the  gold  value  of  129}^  cents 
per  ounce.  He  "  had  the  drop  "  on  the  American  farmer  to 
the  extent  of  that  37  cents  per  ounce.     But  the  37  cents  has 


3°4 


OUR  MONEY  WARS. 


dwindled  to  9  cents  on  the  passage  of  the  Silver  bill ;  and  is 
still  dwindling.  Boys,  you  have  done  well  enough  !  Don't 
try  experiments  !     There  is  too  much  danger  of  a  mistake. 

[They  will  try  the  experiment  of  free  coinage  next.     Re- 
sult— no  dropping  back  of  silver  to  1.00. — S.  L.] 


Here  is  a  condensed,  accurate  statement  of  the  fact  that 
in  all  our  laws  about  payment,  treasury  notes,  etc.,  from  i860 
to  1876,  no  payment  in  gold  is  called  for : — The  laws  relat- 
ing to  issues  of  bonds,  and  of  legal  tender  treasury  notes, 
including  provision  for  payment  of  duties  on  imports,  begin- 
ning with  the  act  of  June  2,  i860,  and  ending  with  act  of 
July  13,  1876,  are  thirty  in  number.  While  "  silver  "  is  men- 
tioned many  times  and  "  lawful  money  "  many  times,  the 
term  "  coin  "  is  used  throughout  when  referring  to  metallic 
money,  in  relation  to  any  of  the  obligations  of  the  United 
States,  and  "  gold  "  not  in  a  single  instance  is  used  in  rela- 
tion to  those  obligations.  The  word  "  gold  '  is  mentioned 
in  but  three  of  all  those  acts  and  joint  resolutions.  The  first 
one  is  in  the  act  of  March  3,  1863,  where  provision  is  made 
for  receiving  deposits  of  that  metal  upon  which  certificates 
might  be  issued  for  circulation.  The  second  is  in  joint 
resolution  of  March  17,  1864,  whereby  any  gold  in  the 
treasury  not  needed  in  coin  payments  of  interest  on  the 
public  debt,  might  be  disposed  of.  The  third  is  in  act  of 
July  14,  1870,  whereby  coins  of  that  metal  may  be  received 
and  certificates  issued.  Even  the  assumption  of  an  obliga 
tion  on  part  of  government  to  redeem  legal  tender  notes  is 
in  these  words,  found  in  act  of  March  18,  1869  :  "And  the 
United  States  also  solemnly  pledges  its  faith  to  make  pro- 
visions at  the  earliest  practicable  period  for  the  redemption 
of  the  United  States  notes  in  coin." 

1891. 

Early  in  the  winter  of  1891,  still  expecting  this  work  to  be 
printed  in  connection  with  "  Sixty  Years  in  Wall  Street," 
which  gives  the  career  of  John  Thompson,  the  banker,  I 
wrote  the  following  account  of  The  Panic  of  November  1890. 

This  book  was  to  be  printed  in  November,  1890.  A  delay 
consequent  upon  the  final  illness  of  Mr.  Thompson,  gives 
opportunity  for  some  mention  of  the  memorable  Panic. 


OUR  MONEY  WARS. 


3°S 


It  much  resembled  that  of  1884  in  being  mostly  a  Wall 
Street  panic.  But  it  is  wider  and  deeper  in  its  causes  and 
effects  than  that  of  1884.  Men  who  understood  the  situa- 
tion, like  John  Thompson,  had  been  warning  the  people  for  a 
year  that  panic  was  close  at  hand,  for  want  of  sufficient  cur- 
rency. But  it  was  left  for  the  suspension  of  the  Barings  in 
London  to  start  the  ball. 

History  repeats  itself  very  literally  in  this  case.  Nearly 
every  article  in  this  book  about  the  disturbance  of  1884  is 
applicable  to  this  one.     Let  us  revert  and  see. 

We  find,  looking  back,  the  statement  that  the  panic  of 
1884  would  have  spread  from  Wall  Street  all  over  the  country 
but  for  "  the  increased  currency  through  silver  legislation ; 
and  for  the  fact  that  resumption  had  been  accomplished  by 
yielding  largely  to  the  demands  of  the  Greenbackers." 

Then  as  now  there  were  not  many  more  failures  than 
usual-  but  enough  to  check  business  considerably:  so  that, 
after  it  was  over,  "  Conservative  bankers  ",  could  congratulate 
the  country  that  "  money  was  now  plenty  again."  Good 
reason  :  because  so  many  industries  had  been  checked,  and 
men  thrown  out  of  work,  who  should  be  earning  this  plenti- 
ful money. 

In  1884,  as  now,  we  find  leading  speculators  buying  stocks 
when  they  thought  they  were  hammered  as  low  "  as  the 
traffic  would  bear  !  "  and  thus  preventing  a  general  smash. 

In  1884,  as  now,  we  had  the  owlish  Tribune  and  such 
papers  saying  :  "  There  is  not  a  competent  student  of  finan- 
cial questions  in  the  country  who  does  not  see  that  among 
all  the  causes  of  the  present  disturbance  and  peril,  the  con- 
tinued coinage  of  silver  [a  pitiful  two  million  a  month]  with 
the  issue  of  paper  certificates  against  coined  silver,  is  the 
most  potent.  All  about  us  lie  financial  wrecks  caused  by  this 
mischievous  policy. 

In  1884,  as  now,  call  loans  of  banks  to  speculators  was  a 
destructive  element,  against  which  even  the  gold-bug  Journal 
of Cotnmerce  raised  its  feeble  whine. 

In  1884,  as  now,  as  soon  as  the  worst  is  over,  the  cry  is 
raised  that  we  do  not  want  more  money,  but  more  banks  of 
deposit  and  discount  "  to  economize  the  money."  "  We  do 
not  want  more  money,  but  more  credit." 

In  1884,  as  now,  our  British  papers,  fiercest  of  gold-bugs — 
20 


306  OUR  MONEY  WARS. 

the  Times  and  Evening  Post — were  wailing  about  the  flood  of 
silver  and  "  the  flight  of  gold."  The  Post  told  us  in  July, 
1884,  that  the  Treasury  had  lost  50  millions  of  gold  since 
January.  "  There  can  be  no  escape  from  coming  down  to 
silver,"  howled  the  Post.  That  same  month  Godkin  was  in 
ghoulish  glee  over  the  "End  of  Bi-Metallism." 

But  in  1890,  as  not  in  1884,  there  is  a  cloud  much  bigger 
than  a  man's  hand  in  the  West.  The  Farmers'  Alliance  has 
elected  many  Congressmen  ;  pledged  before  all  else  to  more 
currency.  Ingalls  has  been  dethroned  in  Kansas — Ingalls 
the  leader  of  the  Senate — and  things  are  on  the  move  gener- 
ally in  the  West  toward  a  glorious  sunset  for  the  nine- 
teenth CENTURY  ! 

Review  of  1891. — In  March.  1891,  I  came  to  Chicago 
as  an  editor  of  the  Chicage  Sentinel  and  the  Chicago  Express, 
leading  papers  in  the  reform  movement  now  called  The 
People's  Party. 

In  May  came  the  wonderful  convention  of  all  sorts  of  radi- 
cals at  Cincinnati,  who  so  peaceably  formed  the  new  party. 
Through  the  summer  and  fall  I  was  writing  for  these  papers, 
and  lecturing  for  the  party  as  occasion  offered  in  Illinois, 
Indiana,  Nebraska  and  Missouri. 

The  fall  elections  were  such  as  were  to  be  expected,  though 
we  did  not  gain  such  victories  in  Kansas,  Nebraska,  and 
South  Dakota  as  we  hoped  for.  Yet  we  made  gains  in  all 
those  States,  and  elected  hundreds  of  officials ;  and  ten  thou- 
sand more  votes  properly  distributed  would  have  enabled  us  to 
beat  the  combination  of  the  Republicans  and  Democrats  in 
them. 

Very  much  of  the  immediate  future  of  the  People's  Party 
depends  upon  the  South.  If  those  who  sympathize  with  us 
there  can  get  over  their  fear  of  Negro  domination,  and  their 
hope  of  salvation  through  the  Democratic  Party,  we  may 
throw  the  next  Presidential  election  into  the  House  and 
elect  the  President.  Or  we  might  even  have  a  universal  polit- 
ical cyclone  like  that  of  Kansas  in  1890,  and  elect  him  in  a 
straight  contest. 

All  our  party  and  a  majority  of  the  Farmers'  Alliance,  are 
in  favor  of  the  plan  in  the  Ocala  Platform  to  loan  money  on 
land.  But  Northern  men  are  generally  dubious  about  the 
loans  on   imperishable   produce — not  so  much  because  they 


OUR  MONEY  WARS.  307 

think  them  impracticable,  but  because  other  plans  seem  less 
risky  and  cumbrous. 

As  I  write,  the  situation  in  Congress  is  very  interesting  to 
our  people.  The  election  of  Crisp  to  the  Speakership, 
though  he  is  a  mere  politician,  seems  to  make  it  certain  that 
the  Democrats  will  make  silver  rather  than  free  trade  the 
leading- issue. 

Nine  Congressmen  and  two  or  three  Senators  stand  squarely 
for  our  party,  and  38  Congressmen,  called  "  Alliance  men  ", 
are  on  trial  there.  It  is  claimed  that  they  will  show  up 
bravely  for  the  Ocala  Platform  when  occasion  offers  ;  but 
many  of  them  talk  as  if  they  considered  that  their  duty  and 
inclination  lies  in  working  with  the  Democrats.  Time  will 
show. 


.  On  Nov.  21,  I  summed  up  the  situation,  as  far  as  radical 
progress  is  concerned,  in  the  following  editorial  in  the  Chicago 
Express,  which  would  make  a  suitable  closing  chapter  for 
this  book. 

DO  YOU  THINK,  O  FOOLS  ? 

There  is  high  jubilation  among  some  short-sighted,  low- 
minded  people,  over  the  fact  that  the  Alliance  and  the 
People's  Party  have  not  done  so  well  politically  this  year 
as  last. 

Do  you  think,  O  fools,  that  the  existing  political,  industrial 
and  social  systems,  all  tending  to  centralization  of  power,  are 
not  to  be  changed  ?  That  because  Tammany  spoils  and  the 
lost  World's  Fair  were  the  bones  of  contention  in  New  York, 
the  whole  country  is  to  sink  to  the  level  of  New  York  ?  That 
all  the  past  progress  of  this  country  in  freedom  and  scientific 
ways  is  to  count  for  nothing  ? 

Do  you  think  that  the  Alliance  and  the  People's  Party  will 
now  vanish  like  the  hoar  frost  before  the  rising  sun  of  your 
stupid,  malevolent  reaction  ?  That  the  money  reform  begun 
thirty  years  ago  by  such  heroes  as  Thaddeus  Stevens, 
Benj.  Wade,  O.  P.  Morton,  Henry  Wilson,  Wendell  Phillips, 
Henry  C.  Carey,  Judge  Kelley  and  Thomas  Ewing.  is  to  be  at 
last  put  down  by  usurers  led  on  by  Jew  Shylocks  ? 

Do  you  think  that  the  stern,  earnest  farmers  who  met  at 
Cincinnati  last  May,  with  all  the  solemn,  religious  decorum 
of  Cromwell's  Ironsides,  will  now  settle  back  to  be  contented 


308  OUR  MONEY  WARS. 

serfs  of  Wall  Street  and  the  multi-millionaires  ?  That  the  im- 
pulse toward  freedom  and  human  rights  that  is  stirring  all 
the  wise-hearted  of  this  and  other  lands,  is  now  to  be  hushed 
by  your  venomous  lies  and  trickery?  That  the  men  of  the 
forest  and  hill  country  and  prairie,  who  have  been  meeting  in 
their  groves  this  summer,  by  the  ten  thousand,  to  consult 
about  the  righting  of  their  wrongs,  are  now  to  be  quelled  by 
a  good  crop,  and  the  billingsgate  of  hireling  editors  and  dem- 
agogues ? 

Do  you  think  that  the  corruption  in  all  high  places  of  trade, 
politics,  legislation  and  social  life,  will  not  work  its  legitimate 
fruits,  in  total  demoralization  and  the  Mexicanizing  of  this 
Republic,  if  not  stopped  ?  That  the  despair  in  the  hearts  of 
all  wise,  thoughtful  people  over  our  present  industrial  and 
commercial  rottenness,  will  suddenly  be  turned  to  jubilation, 
by  the  magic  of  your  devilish  spells  ?  That  when  the  great 
railroad,  telegraph,  oil,  mining  and  manufacturing  trusts  are 
showing  us  what  government  should  take  hold  of,  it  will  be 
allowed  to  keep  its  hands  off  much  longer  ? 

Do  you  think  that  your  little  spurt  of  reaction,  by  a  com- 
bination of  Reps  and  Dems  at  the  polls,  is  turning  back  the 
hands  of  progress  on  the  dial  of  this  epoch  ?  That  Europe 
and  European  ways  are  now  to  be  invited  to  finish  their  dam- 
nable work,  by  taking  complete  possession  of  this  country  ? 
That  Europe  is  to  be  urged  to  set  up  her  usury  pumps  here, 
in  harmonious  unison  with  those  of  our  own  blood-suckers  ? 
That  Europe  is  to  be  encouraged  to  seize,  wherever  possible, 
our  lands,  mines  and  best-paying  industries  ?  That  while 
England  is  beginning  a  tardy  justice  to  Ireland,  by  buying 
the  land  for  the  soil  tillers,  all  sorts  of  monopoly  is  to  ride 
rampant  here  ?  That  when  England  has  just  put  thirty  work- 
ingmen  into  Parliament,  and  is  preparing  to  overthrow  her 
House  of  Lords,  our  "  nobility",  now  uncoroneted,  are  soon 
to  bloom  out  with  coronets  ?  That  when  the  Social  Democ- 
racy of  Germany  is  filling  up  the  Reichstag,  the  American 
Congress  is  still  to  be  run  by  millionaires  and  corporation 
lawyers  ?  That  when  scores  of  towns  and  cities  in  Eng- 
land are  municipalizing  gas,  water,  street  cars,  coal,  etc.,. 
we  shall  still  allow  packs  of  thievish  corporations  to  run 
our  cities  ? 

Do  you  think  that  because  John   Sherman — may  his  tribe 


OUR  MONEY  WARS. 


309 


decrease — sits  grinning  on  his  throne  of  Ohio  Republican 
majorities,  he  will  never  get  his  deserts  ?  That  the  people 
will  not  resent  the  dictation  of  Wall  Street  that  induces 
"great  "  Democratic  leaders  to  back  Sherman?  That  the 
railroad,  mining  and  manufacturing  barons,  aided  by  the  pol- 
iticians, are  to  have  henceforth  free  swing  ?  That  trusts  are 
to  concentrate  our  industries  until  all  come  under  one  in- 
dustrial czar  ?  That  Bean-Soup  Atkinson,  Sumner  of  Yale 
and  John  Sherman  are  to  guide  our  economic  thought  ?  That 
editors  who  confess  that  they  only  run  their  papers  "  to  sell 
news  and  get  ads  "  are  to  furnish  our  future  literature  ?  That 
the  sham  of  the  two  old  parties  pretending  to  fight  over  tariff 
and  silver  and  temperance  is  to  go  right  on  ?  That  we  will 
always  permit  our  predatory  classes  to  bring  over  European 
serfs  by  the  million,  to  crowd  our  native  Americans,  while 
they  howl  about  excluding  the  pauper  products  of  Europe  ? 
That,  in  a  word,  you  "  who  call  good  evil  and  evil  good  "  will 
always  be  allowed  to  run  riot  over  this  glorious  land  ? 

Do  you  think  that  because  Shylock  has  got  our  Eastern 
and  Middle  States  bound  hand  and  foot,  the  West  and  South 
will  tamely  submit  to  the  shackles  ?  That  the  multi-million- 
aires, scoffing  at  the  graduated  property  tax,  will  be  let  grow 
to  be  billionaires  ?  That  the  United  States  will  much  longer 
pay  the  Vanderbilts  thirteen  million  dollars  a  year  salary  for 
robbing  it,  and  the  Astors,  Rockefellers,  Goulds  and  the  rest 
of  the  7,000  millionaire  robbers  in  proportion  ?  That  in  ac- 
cord with  the  "  Hazzard  circular  ",  white  slavery  has  perma- 
nently taken  the  place  of  black  slavery  in  this  land  ?  That 
the  American  people  will  be  much  longer  fooled  by  small  con- 
cessions from  their  tyrants — such  as  a  little  increase  of  cur- 
rency ?.  That  when  foreign  noblemen  tell  us  our  commercial 
barons  are  far  more  powerful  and  oppressive  than  theirs,  we 
will  continue  under  the  yoke  ?  That  when  we  find  the  misery 
of  our  city  poor  as  great  as  that  of  European  cities,  we  will 
take  no  steps  to  abate  it  ? 


O  fools,  you  are  reckoning  without  your  host !  You  want 
to  join  the  innumerable  caravan  of  American  plunderers,  who 
are  astonishing  Europe  by  their  lavish  riot  there.  By  cling- 
ing to  the  coat-tails  of  big  monopolists,  you  little  monopolists 
want  to  get  to  Newport,  Saratoga,  Washington,  New  York, 


3io 


OUR  MONEY  WARS. 


London,  Paris,  Venice,  Rome,  Naples.    You  want  city  palaces, 
rural  villas,  palace  cars,  yachts,  opera  boxes. 

But  beware  ! 

"  Dinna  ye  hear  the  slogan  ? " 

The  farmers  are  coming  ! 

And  the  wage-workers  ! 

1892. 

After  the  St.  Louis  Convention. — Another  delay  in  pub- 
lication brings  me  to  March,  1S92.  Here  is  what  I  said  in 
the  Express  about  St.  Louis  : 

WELL. 

It  is  spring  time. 

The  sowers  have  gone  forth  to  sow. 

What  shall  the  harvest  be  ? 

An  ear-piercing  bugle-call  has  gone  forth  from  St.  Louis, 
for  the  gathering  and  marshaling  of  the  armies  of  freedom, 
and  a  movement  all  along  the  line  against  the  enemy. 

Will  the  movement  be  grand,  general,  disciplined,  irre- 
sistible ? 

Or  will  the  village  oracle  at  the  village  store  be  heeded, 
who  has  "  done  pretty  well,  thank  you"  this  year  ;  and  don't 
see  any  wrongs  to  be  righted,  except  that  "  there  should  be 
more  hard  work  done  and  less  sitting  around  on  dry  goods 
boxes  ?  " 

Even  the  most  conservative  and  stupid  see  that  the  United 
States  are  in  a  very  critical  condition. 

Of  course  the  old  party  papers  will  cheek  it  out, — as  they 
do  in  regard  to  Governor  Fifer's  Jeremiah  cry, — as  long  as 
there  is  anything  to  be  got  from  their  rich  bosses. 

But  all  thoughtful  people,  in  their  inmost  souls  are  asking, 
Whither  are  we  drifting  ? 

What  shall  the  end  of  this  century  see  in  America  ? 

To  all  such  the  voice  of  the  St.  Louis  Conference  comes 
with  no  uncertain  sound. 

"This  is  the  way — walk  ye  in  it." 

The  way  out. 

We  need  a  way  out. 

We  are  drifting  into  a  maelstrom  very  rapidly. 

To   the   time   foretold   by  Macaulay,  when   the    "  hungry 


( )  I TA'  MONE  Y  IV A  RS.  3  1  1 

fellows  "  would  undertake  to  settle  all  our  political,  financial 
and  social  questions. 

The  time  foreboded  by  the  California  millionaire,  who 
did  not  want  to  build  a  palace  in  New  York,  and  thus  make 
himself  a  conspicuous  mark  for  the  hungry  fellows. 

St.  Louis  was  grand,   . 

Unique, 

Magnificent ! 

The  men  meant  it, 

The  women  meant  it, 

The  leaders  mostly  meant  it. 

But  the  movement  is  stronger  than  its  leaders. 

If  any  of  them  try  to  monkey  with  the  buzz  saw  while  in 
motion,  they  will  be  sorry. 

They  are  not  likely  to.  They  will  be  like  the  unruly  boy 
in  the  factory  who  touches  the  big  fly  wheel,  and  concludes 
not  to  try  to  stop  it. 

Or  the  tough  boy  in  the  great  public  school,  who  tests  the 
great  machine  at  some  points,  and  concludes  it  is  too  strong 
for  him. 

What  a  pentecostal  time  at  St.  Louis. 

All  at  length  spoke  one  language — Parthians,  Medes, 
Elamites  and  them  of  Georgia. 

''Multitudes,  multitudes  in  the  valley  of  decision." 

And  the  decision  was  right. 

The  chance  of  the  century  is  now  open  to  us. 

If  we  make  good  use  of  it,  the  country  may  very  speedily 
recover  its  liberties. 

If  we  don't — 

Woe  !  woe  !  woe  ! 


Here  now  in  this  month  of  March,  1892,  the  irrepressible 
conflict  between  Shy  lock  and  the  money  reformers  goes  on 
apace.  The  money  power  in  Europe  and  America  is  fighting 
tooth  and  nail  against  silver.  But  it  is  significant  that  Secre- 
tary of  the  Treasury,  Foster,  writes  in  surprise  from  London, 
that  he  finds  all  England,  outside  of  London,  favoring  the  re- 
monetization  of  silver. 

Here  is  a  specimen  of  the  conflict  raging  on  the  more 
money  question.  The  gold  bugs  say,  we  have  over  24  dollars 
per  capita  "  in  circulation  ",  The  money  reformers  say  about 
5.00. 


3I2 


OUR  MONEY  WARS. 


The   statement  of  the    Chicago    Tribune  is,   December    i, 
189 1,  population,  64,630,000  ;  circulation  per  capita,  $24.38  : 


Gold  coin,  including  bullion  in 
Treasury 

Standard  silver  dollars,  includ- 
ing bullion  in  Treasury 

Subsidiary  silver 

Gold  certificates 

Silver   certificates 

Treasury  notes,  act  July  14, 
1890 

United  States  notes 

Currency  certificates,  act  June 
8,  1872 

National  bank  notes 


Gen.       stock 

coined  or 

issued. 


In  treasury. 


677.774>595 

461,205,960 

77,235,022 

161,852,139 

324,274,918 

72,959,652] 
346,681,016, 

10,135,000; 
172,993,607 


271,843,193 

398,508,756 

14,389,585 

19,202,170 

3,401,308 

1,976,366 

1 3-3  !  6,707 

370,000 
4,841,754 


Amount  in 
circulation 


405,931,402 

62,697,204 

6-.S4  5,437 
142,649,969 
320,873,610 

70,983,286 
333,364,309 

9,765,000 
168,151,853 


2,305,111,909!    727,849,83911,577,262,070 


That  looks  clear  but  is  totally  misleading — ignoring  as  it 
does  the  money  that  has  been  lost  and  destroyed  in  30 
years,  and  that  hoarded  as  reserves  in  banks  and  elsewhere. 
The  method  in  use  in  the  Treasury  department,  to  ascertain 
the  volume  of  currency  in  circulation  is,  to  add  to  the 
amount  of  all  the  coin  minted,  all  the  paper  money  that 
has  been  issued,  and  from  this  sum  substract  the  amount 
held  in  the  Treasury,  and  assume  that  the  balance  is  in 
circulation. 

For  instance,  Government  statistics  ask  us  to  believe  that 
every  silver  dollar  coined  since  1878  still  remains  in  the 
country,  either  in  the  banks,  treasuries  or  among  the  people. 
We  are  also  asked,  to  believe  that  all  the  subsidiary  coin 
that  has  been  minted  since  1878  and  $68,418,371  ;  a  con- 
siderable portion  of  which  was  coined  previous  to  the  war,  is 
still  in  use  as  currency. 

Since  that  is  their  method  of  handling  the  computation 
of  gold  and  silver  extant,  imagine  the  same  rule  applied  to 
paper  money.  Even  if  they  wished  it,  they  have  no  facts 
upon  which  to  base  an  estimate  of  the  loss  by  fire,  wreck, 
flood  or  other  accidents,  including  the  lost  and  worn-out 
bills. 

So   careful   a  statistician   as  N.  A,  Dunning,  author   of 


OUR  MONEY  WARS.  313 

"  The   Philosophy   of  Price,"   gives  the   following  estimate, 

under  date,  August  3,  189 1  : 

Amount   outstanding  as   per  Treasurer's 

statement $1,666,094,420.47 

Amounts  to  be  deducted  : 

Loss  in  gold  coin $200,000,000.00 

Loss  in  silver  coin ...  20,000,000.00 

Loss  in  paper  currency 50,000,000. 00 

Loss  in  fractional  currency 6,916,690.00 

Held  as  reserves  total 603,008,707.00 

Held  in  U.  S.  Treasury 337,144,089.36 

Coin  sent  abroad  this  year 61,695,504.00 

Bullion  counted  as  currency 76,439,588.00 


$i,355>2°4,578-36 

Deducting  this  last  sum  from  the  Government  statement 

above,  we  have  $310,889,842.11,  or  about  $5  per  capita  of 

population — against  $24,  claimed  by  the  enemies  of  the  plain 

people. 

The  following  is  an  able  statement  of  the  situation  in  1892 
from  Chicago  Western  Rural : 

Inductive  Method  With  Silver. — England,  Germany, 
Holland,  Belgium,  and  other  nations  of  Europe,  can  buy 
a  given  amount  of  tea  in  China  and  Japan,  with  a  given  num- 
ber of  grains  of  silver  bullion  ;  whether  they  buy  their  silver 
bullion  at  a  low  price  or  at  a  high  price.  Hence  it  is  for  the 
financial  advantage  of  the  nations  of  Western  Europe,  to  get 
their  silver  as  cheap  as  possible.  The  same  rule  holds  good 
in  the  purchase  of  cotton,  wheat,  silks  and  spices  in  India, 
of  spices  and  medical  supplies  in  Ceylon,  Sumatra,  Borneo, 
and  all  the  Islands  of  the  Indian  Ocean  ;  and  of  tin  ores  and 
ores  of  other  metals  from  the  same  quarter  of  the  globe. 
The  cheaper  the  price  of  silver,  the  greater  profits  European 
merchants  make,  and  the  more  easily  they  can  control  the 
trade  of  the  United  States,  and  all  other  countries  on  the 
Western  Continent.  The  reason  ought  to  be  plain  to  every 
one,  why  bankers  and  merchants  of  London,  Paris,  Amster- 
dam, Berlin  and  other  money  centers  of  Europe,  are  deeply 
and  actively  interested  in  the  monetary  affairs  of  all  the  silver- 
producing  countries  ;  such  as  the  United  States,  Mexico,  Peru, 
and  others  this  side  of  the  Atlantic.     The  reason  ought  to 


314  OUR  MONEY  WARS. 

be  plain  why  they  can  afford  to  enlist,  intimidate,  bribe  or 
hoodwink  bankers,  merchants,  Congressmen,  Senators  and 
Secretaries  in  the  United  States,  and  even  to  spend  money 
like  water  in  controlling  nominations  and  elections  of  Presi- 
dents in  this  country.  The  bankers  and  merchants  of  the 
chief  European  business  centers,  control  and  draw  profits 
from  almost  the  entire  trade  of  Asia,  Africa  and  Oceanica. 
They  are  almost  as  successful  to-day  in  taking  unlimited  tolls 
out  of  the  earnings  of  Americans,  as  of  the  earnings  of  Hin- 
doos, Chinamen,  and  New  Zealanders. 

North  and  South  America  embrace  the  leading  silver  mines 
of  the  earth.  When  an  Englishman  or  a  Dutchman  gets  con- 
trol of  this  silver  product,  he  holds  the  key  by  which  he  can 
dominate  at  will  the  merchandise  of  more  than  half  of  the 
inhabitants  of  the  entire  world.  The  reason  can  easily  be 
seen,  why  the  United  States  Government  has  been  led  to  place 
its  silver  interests  in  the  hands  of  an  International  Monetary 
Conference,  now  in  session  at  a  European  capital ;  and  which 
is  controlled  by  a  large  majority  of  European  diplomats. 
*  *  The  Chicago  Inter-Ocean  of  November  30,  expresses  aptly 
the  theory  of  the  conspirators  on  both  sides  of  the  Atlantic. 
It  says :  "  It  will  thus  be  seen  that  the  whole  subject  of  the 
monetary  system  of  the  civilized  world,  is  in  a  fair  way  to  be 
thoroughly  overhauled  and  readjusted."  This  is  terribly 
true  ;  and  it  will  be  thoroughly  overhauled  and  readjusted  to 
suit  the  money  mongers  of  Europe  ;  and  by  methods  among 
the  most  damaging  to  the  business  interests  of  the  United 
States  that  could  be  devised ;  and  by  the  methods  that  will 
serve  most  successfully  to  make  interest  and  dividend  bear- 
ing securities  continually  enhance  in  value,  while  the  money 
with  which  they  are  to  be  paid  becomes  continually  scarcer 
and  dearer, — continually  costing  more  labor  and  products  of 
labor  than  these  securities  were  worth  when  issued.  Thus 
the  people  of  the  United  States,  with  all  their  conceited 
notions  of  their  own  intelligence,  are  placed  by  foreign  in- 
trigues on  a  level  with  the  Mongolians  and  Malays.  Doubt- 
less, our  Congress  will  be  asked  to  register  the  decrees  of  the 
coterie  of  foreign  gold  and  bond  gamblers,  and  our  people 
will  be  asked  to  sanction  the  conspiracy  by  their  votes. 
Shall  the  American  voter  always  continue  to  swindle  himself 
under  the  delusion  that  he  must  do  it  in  order  to  be  honest  ? 

So  Stupid. — The  bottom  facts  of  the  silver  war,  as  dis- 


OUR  MONEY  WARS.  315 

cussed  in  1892,  are  well  illustrated  in  the  following,  from 
Senator  Teller's  speech  delivered  in  the  Senate,  April  20th. 

Mr.  Gray. — I  ask  the  Senator  whether  he  will  explain 
what  the  mechanism  of  the  process  is,  by  which  the  vitiation 
of  silver  has  brought  the  large  export  of  wheat  from  India 
in  competition  with  the  grain  grown  in  the  United  States. 

Mr.  Teller. — I  will  explain  that  to  the  Senator,  and  it  is  not 
difficult  of  explanation.  I  will  take  as  an  illustration  the 
price  of  silver  to  be  90  cents  an  ounce.  It  costs  to  ship 
wheat  from  Bombay,  Calcutta,  and  other  places  in  India,  to 
Great  Britain,  just  about  twice  what  it  costs  us  to  ship  it  from 
New  York.  It  passes  through  a  region  of  country  hot  and 
unhealthy  even  for  wheat ;  and  when  it  reaches  Great  Britain 
it  is  not  the  best  of  wheat,  and  not  as  good  as  ours,  but  it 
comes  in  competition  and  fixes  the  price  of  American  wheat. 
.Now,  let  us  see  how  it  is  done.  The  India  shipper  can 
buy  wheat  for  $1.20  a  bushel,  and  he  can  send  it  to  Great 
Britain  and  sell  it  for  90  cents  a  bushel,  gets  90  cents  and 
no  more. 

The  English  shipper,  who  takes  it  from  India  to  Great 
.Britain  and  sells  it,  gets  gold  for  it.  He  takes  the  90  cents 
and  buys  an  ounce  and  a  third  of  an  ounce  of  silver.  That 
costs  him  $1.20.  What  does  he  do  with  that  silver?  He 
takes  it  back  and  puts  it  into  rupees  at  $1.38  an  ounce.  He 
has  got  from  $1.84  to  $1.85  for  his  wheat,  while  the  Ameri- 
can wheat-grower,  owing  to  this  beautiful  system  of  finance 
of  ours,  has  got  his  90  cents.  He  gets  a  little  more  than 
that,  for  wheat  has  been  worth  a  little  more  than  90  cents. 
I  only  use  this  as  an  illustration. 

Does  the  Senator  understand  now  how  that  is  done  ?  If 
not,  I  will  explain  further. 

Mr.  Gray. — I  should  like  to  have  the  Senator  explain 
further. 

Mr.  Teller. — The  Senator  does  not  see  it  yet.  Let  him 
take  a  pencil  and  a  tablet ;  let  him  put  down  the  price  of 
wheat  in  Bombay  at  $1.20;  let  him  add  to  it  the  14  cents, 
the  cost  of  transportation,  and  he  has  got  $1.34.  That  is 
what  it  will  cost  when  it  gets  to  England,  and  he  realizes 
$1.84  or  $1.85,  according  to  the  market  price  of  silver,  for 
his  wheat.  Can  the  Senator  make  the  subtraction  of  $1.85 
and  find  a  fair  margin  for  the  Indian  exporter? 

Mr.  Gray. — I  do  not  want   to  interrupt  the  Senator  ;  but 


316  OUR  MONEY  WARS. 

in  both  cases,  both  for  the  bushel  of  wheat  shipped  from  this 
country  and  the  bushel  of  wheat  shipped  from  India,  the 
producer  is  paid  in  London  or  in  Liverpool  in  gold,  is  he  not  ? 

Mr.  Teller. — Certainly,  and  if  the  American  wheat-grower 
buys  silver  he  brings  it  back  here,  and  it  is  still  at  the  same 
price  it  was  when  he  got  it  in  London,  and  it  will  not  buy 
any  more  than  his  90  cents  of  gold.  But  if  the  Indian  mer- 
chant takes  it  back  to  India,  it  buys  as  much,  ounce  for 
ounce,  whether  it  is  in  coin  or  in  bullion,  as  it  did  thirty 
years  ago.  That  is,  the  purchasing  power  of  an  ounce  of 
silver  is  in  India  $1.38,  and  it  has  cost  him  90  cents. 

Mr.  Gray. — I  will  ask  the  Senator  whether  the  90  cents 
which  the  American  grower  gets  for  his  wheat  in  Liverpool, 
when  it  comes  back  here  is  not  equivalent  to  90  cents  in  gold  ? 

Mr.  Teller. — Certainly  it  is. 

Mr.  Gray. — Then,  what  right  has  he  to  complain  ? 

Mr.  Teller. — Mr.  President,  he  is  so  stupid  in  this  country 
that  he  does  not  complain.  [Laughter.]  The  American 
wheat-growers  have  sat  by  and  clapped  their  hands  for  both 
of  these  great  political  parties,  who  have  been  cutting  their 
throats.  They  will  complain  after  awhile.  But  still  the  fact- 
is,  our  producer  has  for  his  bushel  of  wheat  90  cents  and  the 
Indian  has  for  his  $1.84  to  $1.85.     Liverpool  price  in  silver. 

In  the  year  1873,  when  silver  was  demonetized,  India  for 
the  first  time  sent  wheat  to  the  market ;  she  sent  then  290,- 
000  bushels.  This  year,  in  eleven  months,  she  has  sent 
50,000,000  bushels  of  wheat,  to  compete  with  the  wheat- 
growers  on  American  soil.  At  the  time  silver  was  demone- 
tized here,  Russia  had  never  put  into  the  markets  of  the  world 
more  than  twenty-five  or  twenty-six  million  bushels  of  wheat. 
In  less  than  six  months  now,  with  a  famine  in  one-third  of 
her  land,  she  has  put  100,000,000  bushels  of  wheat  in 
Europe. 

India  had  never  sent  any  wheat ;  she  never  could  send 
any  wheat  while  silver  was  at  par. 

Another  item  from  Henry  Carey  Baird,  in  answer  to  the 
wonderful  Mr.  Harter  of  Ohio,  is  full  of  meat  on  the  gold 
question.     He  said  : 

Gold  Imports,  1878-1892. — Being  desirous  of  reaching 
sound  conclusions  as  to  the  effect  of  silver  legislation  on  the 
movements  of  the  "  metal  ",  let  us  now  rather  attempt  to  form 
them  from  the  longer  period   of  fourteen   years,  which   has 


O UR  A10NE  Y  IV A  A'S.  3  r  7 

elapsed  since  the  attempt  to  restore  silver  to  its  Constitutional 
position  of  a  "money  metal  ". 

On  February  28,  1S78,  the  so-called  "  Bland  bill  "  became 
the  law  of  the  land,  and  on  May  31  of  the  same  year  a  per- 
manent stop  was  put  to  the  contraction  of  the  Greenback 
circulation.  Now,  what  has  been  the  result  ?  In  the  four- 
teen years  commencing  July  1,  1878,  and  ending  June  30, 
1892,  while  producing  (January  1,  1S78,  to  December  31, 
189 1),  $486,000,000  of  gold,  we  have  actually  gained  by  im- 
port $108,837,000  of  that  "metal".  The  extent  of  the 
workings  of  this  "  vast  engine  "  of  civilization,  not  of  "  con- 
traction ",  in  adding  to  our  gold  resources  nearly  $595,000,- 
000  is  indeed  great ;  but  in  addition,  up  to  November  1,  1892, 
we  had  added  over  $500,000,000  in  silver  dollars,  silver  cer- 
tificates and  silver  Treasury  notes,  to  the  circulation,  outside 
of  the  United  States  Treasury.  These  are  great  sums,  but 
'they  are  not  all.  While  on  March  15,  1878,  the  loans  and 
discounts  of  the  national  banks  were  but  $854,750,000,  and 
their  deposits  but  $613,000,000;  by  September  30,  1892,  the 
loans  and  discounts  had  swollen  to  $2,153,498,000  and  their 
deposits  to  $1,779,295,861.  What  a  vast  addition  to  the  in- 
strument which  mobilizes  the  services,  commodities  and 
ideas  of  the  people. 

1893. 

Panic  of  May. — Again  the  solemn  horologe  of  the  years 
strikes  ;  and  we  are  in  the  May  panic  of  1893,  not  to  mention 
the  Fair. 

The  Wall  Street  men  admit  that  they  permitted  the  panic 
because  Secretary  Carlisle  dared  to  propose  to  do  right,  and 
"  redeem  "  Treasury  notes  in  silver. 

Deep  thinkers  are  still  very  much  occupied  with  the  basic 
facts  concerning  the  rise  of  gold,  while  silver  and  all  staples 
have  remained  about  stationary  for  20  years. 

Henry  Carey  Baird  has  this  about 

India  and  America. — The  imports  of  raw  cotton  into  the 
United  States  are  not  for  the  South  the  only  or  the  most 
alarming  feature  in  the  cotton  situation  to-day.  Not  only 
do  Egypt  and  India  compete  with  the  South  in  Europe,  but 
since  the  depreciation  of  silver  the  development  of  cotton 
manufacturing  in  India  has  become  a  fact  of  great,  indeed 
marvelous,  import.  The  depreciation  of  the  rupee  without 
any  material  appreciation  in  prices,  has  acted  as  a  prohibitive 


318  OUR  MONEY  WARS. 

tariff  against  the  rest  of  the  world,  in  India,  China  and  Japan, 
with  cotton  goods.  With  this  has  developed  a  wonderful 
export  trade  of  India  with  China  and  Japan,  especially  in 
cotton  yarn. 

In  a  speech  by  Mr.  John  A.  Beith,  delivered  at  a  town 
meeting  at  Manchester,  England,  called  by  the  Mayor,  October 
27,  1892,  the  following  statement  is  made: 

"  But  if  we  go  more  deeply  into  the  matter,  we  find  that 
during  the  period  when  there  were  exceptional  causes  for  its 
expansion — such  as  the  opening  of  the  Suez  Canal,  the 
quadrupling  of  the  railway  system  of  India,  and  a  reduction 
of  steam  freights  almost  as  low  as  sailing  vessel  freights, 
through  the  discovery  in  engineering  of  the  triple  expansion 
system — not  only  has  our  Eastern  trade  been  retarded,  but 
the  practical  refusal  to  take  payments  in  the  money  of  the 
East,  except  at  an  enormous  discount,  has  diverted  the  chan- 
nels of  trade;  and  silver-using  countries,  such  as  China,  have 
felt  themselves  compelled  to  go  past  Manchester  and  to  trade 
with  silver-taking  countries.  Now  the  figures  on  this  question 
are  absolutely  appalling.  Indian  mills  did  not  begin  their 
existence  with  this  change  in  the  currency.  For  ten  years 
before  this  change  came,  Indian  mills  were  in  existence  and 
were  working  vigorously,  and  making  progress  in  India  ;  but 
during  the  whole  of  that  ten  years  were  practically  able  to 
export  nothing.  Manchester  had,  up  to  that  time,  always 
'  taken  the  cake '  in  the  neutral  markets. 

"  In  1874,  the  total  exports  of  yarn  from  the  Indian  mills 
to  China  and  Japan  amounted  to  only  1,000,000  pounds.  It 
was  only  in  1875,  and  when  silver  had  fallen  3  pence  per 
ounce,  that  the  1,000,000  pounds  of  exports,  which  it  had 
taken  Indian  mills  nearly  ten  years  to  get  up  to,  at  once  ex- 
panded, as  if  in  obedience  to  the  wave  of  an  enchanter's 
wand,  into  5,000,000  pounds.  In  1S80  there  was  a  further 
fall  of  5  pence  per  ounce  ;  and  consequently  a  further  advan- 
tage to  the  silver  of  India  and  China,  as  compared  with 
England,  accepting  only  gold  payments,  and  so,  then,  the 
5,000,000  of  exports  from  India  became  25,000,000.  In  1885 
another  fall  took  place,  and  the  25,000,000  became  75,000,- 
000.  In  1889  there  was  a  further  fall  -of  5  pence  in  silver, 
and  the  75,000,000  became  127,000,000.  In  189 1  there  was 
still  a  further  fall,  and  the  127,000,000  of  exports  of  yarn 
from  India  to  China  became  165,000,000;  so  that  in  seven- 


OUR  MONEY  WARS.  319 

teen  years,  through  the  operation  of  this  cause  chiefly,  1,000- 
000  pounds  of  yarn  exports  per  annum  had  risen  to  165,000,- 
000  pounds  per  annum. 

"  These  are  very  large  figures,  but  if  you  look  a  little  more 
into  the  details  they  become  even  more  appalling.  One  hun- 
dred and  sixty-five  million  pounds  of  yarn,  sent  from  Bombay 
to  China  and  Japan,  means  that  India  is  sending  six  times 
as  much  as  the  United  Kingdom  sends  to  China  and  Japan, 
twice  as  much  as  the  United  Kingdom  sends  to  India,  China 
and  Japan  together  ;  and  is  indeed  very  fast  approaching  the 
figure  of  Lancashire's  total  exports  of  yarn  to  the  whole 
world.  If  the  ratio  of  increase  continues  as  hitherto,  the 
shipment  from  India  will  exceed  in  from  three  to  four  years, 
the  total  shipments  of  yarn  from  the  United  Kingdom  to  the 
whole  world,  including  India,  China  and  Japan." 

Verily,  verily,  the  South  must  soon  revive  its  political 
economy  ;  and  the  hour  when  this  people  ceases  to  be  domi- 
nated by  cotton,  will  mark  as  great  an  advance  in  our  prog- 
ress and  civilization,  as  does  the  first  day  of  January,  1863, 
when  slavery  was,  by  proclamation,  abolished.  The  disadvan- 
tages that  have  grown  out  of  the  belief  of  the  Southern  people 
in  the  domination  of  cotton,  during  the  past  seventy-five  years, 
have  vastly  outweighed  any  national  advantages  arising  from 
the  cultivation  of  that  staple  in  the  United  States. 

The  dethronement  of  the  American  cotton  tyrant  will 
therefore,  be  one  of  the  grandest  and  most  beneficent  events, 
in  all  our  history.     May  it  therefore  come,  and  come  quickly  ! 

Henry  Carey  Baird. 

Philadelphia,  March  21,  1893. 


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